[first posted 5/21/2013. CraigInNC is a former GM employee, and has been sharing the benefits of his insider’s knowledge and perspective since he arrived here at CC. In this post, which was originally a comment Craig left, he shares his thoughts on the external and internal forces at work during the crucial era that started with the OPEC Oil Embargo, and which he identifies as a key turning point at GM. The decline of GM is the biggest automotive story just about ever, and there obviously are many takes and perspectives to it. Feel free to agree or disagree, but please keep the tone civil. – PN]

GM’s downsized 1985 FWD C-Body cars (Cadillac DeVille and Fleetwood, Olds 98, Buick Electra) and 1986 E/K cars (Eldorado/Seville) represent one of the key turning points at GM. The situation with these all-new cars was not just confined to those models only, but was part of a broader set of directions that GM decided to take ten years before they hit the street. To say that OPEC had influence on this would be an understatement, but that affected all cars, most especially the domestics who built big cars. At that time, most of the imports were very small, with the exception of some Mercedes models.

As much as we blame Roger Smith for all of the troubles of the 1980s, he was only marginally influential in the process that got all of this going. He could have done more probably to exert pressure to tweak models, but the die was already cast before he assumed the chairmanship in the fall of 1980. The situation as I saw it was like this:

Of course the OPEC Oil Embargo of 1973-1974 changed everything – it burst the bubble for most Americans and made us realize that the oil that begot gasoline was a finite natural resource, and a resource that was not entirely controlled by the United States. We all pretty much know and understand that part of history so nothing more needs to be said.

CAFE was enacted in 1975, to take affect for MY1978 passenger cars and MY1979 light trucks. GM was most affected by this legislation as they were the master builder of large cars. Chrysler fuel economy was probably slightly lower than GM’s during the 1970s, but given Chrysler’s dire financial situation by the late 1970s, the focus at Chrysler was keeping the company alive rather than the threat of government action on CAFE. Also being the weakest of the Big Three with about a 15% market share, Chrysler was less of a threat to government action than GM, which always lived under the threat of anti-trust, much like AT&T and IBM.

As I commented in the article with the Olds Firenza, GM not meeting CAFE standards would likely have resulted in severe consequences. At that time, Washington wrote legislation and bench-marked it again GM. AT&T gave you telephones, RCA gave you TVs, NBC/ABC/CBS gave you TV programs, Kodak sold you film for your camera, and IBM sold you computers. That was it in a nutshell. But as we can see, each and everyone of those companies no longer exist in historical form. Some like AT&T were forcibly broken up, others like IBM & GM endured a decline and recovered in new form, and of course we know how TV went from 3 channels to 3,851 and counting…

Ed Cole (left) retired as GM President in 1974. He was one of the last truly influential GM Presidents that was considered a “car guy.” He started his career working in an auto parts store and ended it as President of Checker before he tragically died. Pete Estes (right) followed Cole and was an operational guy, but under him the guy got rolling and despite his legendary career with Oldsmobile, Pontiac, and Chevrolet, he did not have the swagger of Ed Cole and others. But he was much loved. And a man of extreme innovations. While others were more big picture in their pronouncements, Estes understood all the details. As young GMI students, we were all in awe of the big names like Mitchell and Cole, and even Iacocca at Ford, because they were celebrities. But for those that did not possess extreme extroversion, a guy like Pete Estes whose influence was felt less in what you saw on the outside of a car than what you felt on the inside driving it. He was a real engineer’s man and it is quite apropos that there is a near shrine to him on display in the Scharchburg Archives at Kettering University.

Roger Smith was a numbers man; his tenure before Chairman and CEO was Executive VP of public relations, governmental affairs, and finance. Things we considered necessary for doing business but never expected anyone to get promoted to the head of the company from. A very unusual situation and one that many had a difficult time adapting to. We were used to getting our ideas approved or disapproved by guys that had walked in our shoes before hand. To discuss costs before results was tantamount to squashing creativity and productivity.

Part of the genius of GM for so many years as that is was really a collective organizations of mini brain trusts and ideas and energy flowed up to the top from below. Things like the genesis of the turbo Buick V6 originating from a Boy Scout project is testament to this. That would have been nearly impossible to have occurred after the 1980s. There simply was not that level of flow of communications. Coming from a non-operational background, Smith felt no connection to the engineering crew that actually made everything that that we sold. He had no personal affinity for any of them and often did not even know all but the most senior staff of the divisions at the time he became CEO. Thus, he felt unencumbered to embark on various projects of his liking without pains of guilt.

Bill Mitchell retired in 1977. Mitchell exerted influence over corporate management unlike what had been seen before or since. Pretty much whatever Mitchell wanted, he got. Unless it was mandated by the government, no one told Mitchell what to do. Unfortunately, Irv Rybicki, who replaced Mitchell, did not have the spine nor the influence that Mitchell had. By the time that Rybicki retired in 1986, he was basically designing cars that he was told to design and not the other way around.

By the time that Chuck Jordan assumed the design reigns, things were already too far along to be able to correct in concrete fashion, but had Jordan followed Mitchell, I personally feel things would have been a lot better. Jordan was a real fan of Cadillac and his influence was most felt with the 1992 E/K designs that are widely considered smart looking. Jordan was also influential in convincing management to begin upsizing cars again and was largely responsible for why cars grew from 1988-on. Of course Mitchell is second to Jesus Christ in automotive styling at GM, but Jordan had a flair for presence second only to that. The current GM design chief, Ed Welburn is very talented himself, but Jordan was the last of the old guys with the critical eye.

In the aftermath of OPEC, with the coming of CAFE, and changing customer tastes, the decision was made in 1975 within GM on a corporate level, to go full speed into FWD and to maximize space efficiency. The belief was, rightly, that the days as we knew them were over. The paradigms that drove automotive design and development from the first Oldsmobile no longer applied. Up until the late 1960s, automakers built whatever they wanted, totally unencumbered by anything, whether it be government regulation to world events. Europe and Japan were still digging out from the ashes of WWII. Detroit built cars represented everything that we thought of about the United States.

I remember sitting in an auditorium at GMI when a GM executive gave a speech extolling to us the virtues of GM and how it fits in with the rest of the country. You know “what’s good for GM is good for the US, etc…” The car was the ultimate expression of the freedom that built this country. Manifest destiny, live free or die, and the power of the individual. Soviet citizens drove Ladas and East Germans drove Trabants. We drove cars that represented the country’s industrial might, and they were styled accordingly.

Then it all changed. A bunch of small men, dressed in white shirts with skinny black ties and coke bottle glasses came in and told us it was all a dream. Well not really, but it felt like that. Suddenly we had insurance companies breathing down our backs, the EPA looking for trouble, NTHSA telling us that people were crazy, and OPEC told us that strange sounding men with permanent tans dressed in bathrobes showed us that they had more control over our behavior than our own elected government. It was very surreal after a while.

After 1978, everything seemed to be a giant scramble; if it wasn’t CAFE, it was cash flow, or something else. Nothing felt like it flowed freely from the brain to the garage. Everything felt like a compromise; success felt like you achieved as much as you could. Everything was a what if… The days of building cars from dreams that Bill Mitchell had of cars coming out of the clouds in England were over.

Given all of these factors, the decision was made at the corporate level to take the direction of the company towards FWD and space efficiency. The second oil crisis (1980) and the two following years of uncertain energy prices and inflation only validated that. First came the X cars (Citation, etc.). Then came the J & A cars, and the rest followed as we know them. It was a total commitment, not just on the model level, but corporate wide. RWD was gone, done, finished; for all but the most specialized models of passenger cars like the Corvette.

If all had went accordingly to plan there would have been NO RWD cars, except for a few, by MY1985. It was a paradigm shift unheard of in the automotive world that ranks probably third behind the invention of the self starter and the automatic transmission, in terms of what changed people’s perception of what a car was. Yes, the market had the VW Rabbit that was small, efficient, and FWD with a transverse four cylinder engine, but the Rabbit was a niche vehicle. It was purchased by people that needed a small car, and VW at that time did not produce anything that matched the center of the buying public, the big RWD car.

As much as we disparage the Citation, when it came out it really changed the thinking of both Detroit and the US buying public. Especially as time went on with the release of the J and A body cars, everyone knew where the market was going. Chrysler came out with the K cars. Had GM decided to make smaller RWD cars with longitudinal engines, it is very likely that FWD transverse cars would have remained the purview of imports, and/or only smaller cars. To underestimate the impact would not do justice to the sea change that both affected the design culture inside Detroit and in the minds of the US buying public. One only has to think of the Chevette and the Vega as ultra-small cars with ultra-conventional designs. While all these ‘deadly sins’ of the 1980s might have cost GM dealers, their influence begot space efficiency as a benchmark for car design that remains with us today.

The fulcrum of influence at GM shifted from the divisions to the executive level under Roger Smith. No more reflective of that was the ill-fated 1984 reorganization that largely demolished corporate autonomy. I suppose from a business perspective, the old model was not going to last forever. As we saw with the engine mixing affairs of the 1970s, total vertical integration of the divisions was no longer cost effective in light of continuing escalation of costs of goods sold, regulation, and the costs associated with the corporate plan to move to FWD.

In the old days, cars were simple, they were RWD, mostly framed vehicles, V8s, carbureted, and large. Most of the budget in car development went to styling. Engines evolved incrementally, bodies could be changed rather easily and with less expense with a body on frame design. Everything was set up nicely. Even using identical frames and substructures, you could make a car look and feel completely different with relative ease. GM was the master at this. With FWD and unibody that was no longer possibly, at least as easily and inexpensively as in the past.

FWD costs money, a lot of money. Unibody designs cost more money to design because they have to be designed as a package no just as a body that can be dropped on an existing frame. And they cannot be easily made different. Hence all the cookie cutter cars of the 1980s. Unfortunately, the other automakers, especially the imports, only built one kind of car, so there was nothing to look similar to, until the Japanese came out with their premium brands and many of those models started looking and feeling a lot more badge engineered (although admittedly not to the degree of GM vehicles).

So when you have five divisions now having to build similar-sized FWD cars on unibody designs, you go from platforms that could be before-easily altered to fit each divisions styling themes and customer characteristics, to platforms that were virtually impossible to make different. It was a bad situation that could not be easily rectified. Believe me, that idea was lost on NO ONE at the division level and it pained many people. But when a company makes a corporate decision to take the company in one direction and invests what is the equivalent of the GDP of probably several states, directions can’t be changed easily. Given the predictions of gas prices going up and regulations continuing, FWD was here to stay and we had to make the best of it.

Given that GM went whole-heartedly into the FWD program, not only did the basic body structure change, but everything else changed with it. The X cars were one of the first mass market vehicles that had fuel injection standard. Real fuel injection, like the kind that took cars into the modern ages and lasted well into the 1990s. That was another incredible paradigm shift. Of course the Seville was the first big GM model to have a modern EFI system, but it was a niche model and handled only by Cadillac dealers who could train select personnel to service it. And that EFI system borrowed heavily on existing European systems.

The GM TBI system that debuted in 1980 set the standard for basic but highly efficient throttle body fuel injections system in production. While there were many engineering failures over the years, that TBI system was not one of them and became a highly reliable rock solid design along with the subsequently developed SFI that came out in turbo Buicks for 1984 that again set the standard for fuel control in the industry. Until the recent adoption of direct injection systems, fuel injection systems were largely carbon copies of the original system that debuted in the 1984 Regals.

All of this was done on a massive scale, unprecedented before seen. The closest thing to a total re-engineering was the 1966 Toronado and that was justified because it was sold to Oldsmobile and eventually Cadillac and Buick because they were premium cars. Now we were building inexpensive everyday cars for the masses that had move development in them that had been spent developing the atomic bomb of WWII. If you added up all the monies spent from the first dollar spent on the Citation to the last car converted from RWD to FWD and converted them to 2013 dollars, you could almost balance the federal budget. No kidding. It was at that level. It was overwhelming. It was nothing like anything could have dreamed or imagined when they entered engineering school.

When we started college, we all expected to be building variations of RWD body on frame cars forever. Ones that were styled like each division wanted them. Some cars like the Vette and the Toronado were different but they were low volume vehicles and had dedicated staffs. Little did I know that by the time that I effectively retired full time after 41 years that we would be driving massively computerized FWD vehicles with space aged materials that could protect us from all but the most dire of situations.

And that really was where all the failures came from. Some of them, like the V864 were stop gap, clearly introduced to bridge between old and new. Others like the HT4100, an engine that turned out to be quite sound by the end but was rushed into production due to time and circumstance. So in a way, it was like mobilizing for war. The changes affected everything. Almost nothing was the same from 1975 to 1985. I am not sure a single automotive company changed like that in a ten year span on the face of the earth. Maybe the Soviet bloc companies but I suppose we could confine it to free market countries.

Whenever you undertake such massive change on that level, with a company that large, with that amount of influence in the industry, mistakes are going to happen. That does not absolve anyone of the effects, but it would have been difficult to have imagined how it could have been totally perfected since so much was going on we had our hands full just keeping everything moving.

So people ask, well how did Honda, or Mercedes manage to keep it together during this time and grow? Well, quite simply, they were a lot smaller, built fewer products, and were largely unaffected by the forces that affected the Big Three and GM in particular. Toyota built nothing of any particular size except for the Cressida which was only a bit player in the market. Honda only sold Accords, Civics, and Preludes three of which were small vehicles unaffected by CAFE, so Honda as a corporation did not have to endure a wholesale change that the Big Three experienced after OPEC. They could quietly continue to devote their energies into continuing to develop their vehicles without radical changes.

When gas was in short supply and fuel economy was of paramount concern, people bought a lot of small imported cars, plus a lot of small domestic cars. But when those concerns subsided we saw buyers return to more traditional buying patterns if only for short periods. During the 1990s we had an extended period of prosperity and low relative gas prices which, by that time passenger cars were already fully redesigned and much smaller, drove SUV sales which were the spiritual successors to the traditional American car design. Gas went back up and people started buying smaller again and the cycle has yo-yo’d around like that for some time.

So in a way, at least for the Japanese automakers, building only small cars, when things began to change on the energy front, they did not go to the market, but the market came to them. They just sort of happened to be there, like the Mustang II was in 1974, designed without any real regard to OPEC, but happened to be something that seemed so right for the moment. And it sold, partly because it was more manageable than the recent Mustangs, but often because it was just much more efficient. Same with the Vega, despite the troubles of the first couple of years, MY1974 was a banner year because it was a small efficient car when people’s worlds were turned upside down.

In the 1980s, the biggest sin for Roger Smith was the money spent on extraneous projects unrelated to car design and build. Things like EDS, Hughes Electronics, and buying robots to lick envelopes when money could have been spend refining product. It felt like the Federal government, billions of dollars flying everywhere but no one really knew where it was going. In 1965, every dollar went into putting cars into people’s garages. Yes Frigidaire built fridges and appliances, but they did so in part because they also made air conditioning for cars, and those product lines were profitable, and did not drain from corporate resources. I did not know until about eight years ago that a division of Hughes Electronics developed and introduced DIRECTV, yes THAT DirecTV that competes with DishNetwork and TimeWarner for our television viewing. So all you GM haters with DirecTV, better switch fast! Well actually you don’t have to since it is a fully separate company (spun off in 2003), but just so you know…

By the time that Roger Smith retired in 1990 and Bob Stempel assumed the reigns, things were a mess. Bob should have replaced Pete Estes in 1981, but he wasn’t at that point in the food chain at the time, but like Pete, he was an operations guy. He knew how to get things done. He could not have reversed the push to FWD, but he would have not spent the money that Roger Smith did on everything but and might have made these cars the best vehicles ever produced, or at least much better than they were. By the time he got the keys, he was hamstrung. The company was bleeding money, nothing was selling, and he spent most of his time trying to right the ship. Unfortunately for him, he was out of the country for much of the 1980s managing Opel (which was making money hand over fist at the time not like today where it is dying) and did not have influence over North American operations. But Stempel was a car guy and would have done well if he would have had the resources to do so.

To tie this into something that Paul might appreciate, back in 2007, there was an article written over at TTAC:

While most of the (first) story documents various ills experienced by the owner and others, I feel he rightly points to the X car as the beginning of the end. Really that date was June 21, 1975 when the executive committee approved the whole FWD X platform to begin with, but that is being discrete.

Its hard to say whether it was the decision to go FWD that began the decline itself or the ills that the car suffered as a product. Because we have to go back to the original premise of what made GM what it was and what made it great. All that changed with the decision to go FWD unibody. People bought GM cars because each division made something unique and not only was it unique, but at least with regards to imports, the only competition was from within the Big Three.

Before OPEC, no one really cared about imported vehicles except on the margins. Mercedes was chipping away at luxury sales but unless they started building mass market vehicles, they would have been confined to a small section of that market. As would have VW and the other Europeans who built small quirky vehicles that catered to niche segments of the populations that had specific needs or were just weird enough to not mind driving 55hp VW buses that went nowhere fast. If OPEC would not have happened, one of two things would have happened: imports would have remained nibbling on both ends of the extremes, or they would have been forced to introduce larger products that would have looked a lot more like old fashioned American cars than what they were currently building. As much as we talk about how much OPEC and CAFE affected the Big Three, just to play devil’s advocate I have often thought about what would have happened if the reverse were true that the government would have passed a law mandating cars of a minimum size. GM would have gladly dropped the Vega and chaos would have reigned in Tokyo. Not unlike how it reigned in Detroit for so long.

So the moral of all of this way many things, we could argue that Roger Smith wasted money that could have been spent on product, we could blame it all on OPEC for destroying the US business model, blame it on UAW for extracting maximum benefits, blame it on corporate decisions to go FWD. Its impossible to really do that constructively. It was just so big. So much was going on. The real deadly sin was that it was all just overwhelming. Almost like a drug addiction.

Once the ball got rolling back in 1975, it blew up into this huge amount of change that was unprecedented in history. It got out of control, and sadly, probably to the point that no one man could have stopped. When you have a corporate the size that GM was at one time, that was bigger than probably half the countries in the United Nations, it was like nuclear fission. When the reactions start happens they are hard to control. It was like the meltdown in Chernobyl.

So while I look back at the 40+ years of my life, and think of all of this and history and my place in it, what could have been done differently, what I could have done differently, in the end I really do not have any answers. It would have been like trying to figure out how to run the world during WWII. I suppose in the end it had to all go away. The days of vertically integrated massive corporations with dominating market shares are over. Some will dominate for a short time, usually when a new product is introduced, but the days of GM, AT&T, IBM, Kodak and RCA are over. Gone, done. Globalization, technology, communication, whatever the factors are will never let such things happen again.

But it was a ride, a fun ride, a ride I never dreamed would turn out the way it did, but despite all of the bitterness I could have regarding everything, I probably would not have had it any other way.

267 Comments

There were too many overlapping brands (or, more specifically, too many distribution channels.) That encouraged a culture of badge engineering and cannibalization, which eroded the value of the individual brands and necessarily became more desperate as the company began to lose market share.

GM and Detroit generally were woefully unprepared for the OPEC crisis, which provided a sales opportunity to foreign competitors.

And the Japanese beat the pants off of them with total quality management and lean production. Consumers began to realize that the build quality and engineering just weren’t all that good.

Ford invented automotive mass production, and GM had invented the idea of competing based upon branding, styling and features. GM wasn’t expecting that business model to evolve anywhere beyond where they had taken it, and were unwilling to accept that some foreigners might be better at the game than they were. The greatest legacy cost was hubris, which fostered that inability to adapt to change.

Over a period of a decade, GM went from making cars that made Americans happy to making cars that didn’t. Somehow the biggest car company in the US decided that the future was thataway – and their maket went thisaway instead. Somehow the biggest car company in the US didn’t see having both thisaway and thataway in their product portfolio as a possibility.

No one demanded that GM drop the cars Americans liked driving. No one told GM they no longer wanted a rear drive, body on frame, automobile. GM decided to stop making the cars Americans liked to drive. GM committed itself to a belief that the future of automobiles was not the automobiles that made them the biggest car company in the world. It was as if the New Coke phenomena infiltrated GM.

GM was monolithic, and still thinks monolithically. It was so hide-bound in this that regardless of the brand and the brand’s market, GM decided it’s one size fits all front wheel drive, unibody car of the future was going to fit every brand and market. So what is being described in this wonderful article was SELF INFLICTED. OPEC didn’t do it. Technology didn’t do it. Labor didn’t do it. Because if those were really the reasons this was done – then why is GM no longer producing the same cookie-cutter front drivers today? it is 2013 and there is more diversity of drivetrains and manufacturing methodologies than there was in 1985. GM’s problems were self inflicted, not forced upon them.

GM decided to reinvent themselves in a manner that only a monolithic hide-bound top heavy corporation would – and blew it. GM wasted billions of dollars reinventing themselves when no one was forcing them to. H. Ross Perot mentioned accurately that GM could have BOUGHT Toyota for what they wasted during the Roger Smith years. However, the men at the top of the organization couldn’t understand how to make an organization as big as GM do a 180 degree backflip, even when it wasn’t necessary.

GM’s new cars sucked like a F5 tornado in a Black Hole. What we wanted in a GM car was no longer made. You wanted a rear drive Park Avenue? Tough – you got a front driver that couldn’t be a Park Avenue even with when it came with tufted crushed velour.

We wanted real GM cars. GM told us that their craptastic front drive unibody pseudomobiles were better. We knew what they knew at the time they said this – these cars were not real GM cars.

When the front drivers didn’t give us what we wanted in a GM car, we left GM.

That was Roger Smith’s sin. The wholesale switch to FWD was green-lighted before he became CEO, so he wasn’t directly responsible for badge engineering. What he did was spend all the profits of the early 1980s on various non-automotive projects that could have been better spent improving the product line.

Most of your comments I agree with. Hindsight is always 20/20. The question is is that was switching to FWD really the core problem or was it just bad execution? Say for example the Citation was perfectly reliable. Or any of the other X cars or A cars or J cars. Would it have mattered? Would people have still purchased absolutely perfect cars that looked the same?

I say that because it is proven that people will purchase less than perfect products, and cars too, if there is an intangible benefit that still brings value.

People loved GM cars, warts and all, until they started to not look like GM cars.

A decade after the X Car debacle, GM perfectly presented the Saturn. They sold over a million of them. After twelve years and one restyling, this vehicle was allowed to die on the vine.

Saturn proves that GM knew how to do it when they realized a new car needed to be completely redesigned from the ground up and untouched by it’s bureaucracy.

GM was completely foolish to believe in the one car fits all concept Henry Ford followed almost to the demise of the Ford Motor Company fifty years earlier.

BigOldChryslers

Posted May 23, 2013 at 6:40 AM

> GM was completely foolish to believe in the one car fits all concept Henry Ford followed almost to the demise of the Ford Motor Company fifty years earlier.

All of the Big-3 must have been panicking the same. American consumers quickly abandoned larger RWD cars, and the auto manufacturers must have assumed this change would be permanent.

Look at Chrysler during the same time period, which almost went bankrupt and then converted their entire line-up to smaller FWD cars, mostly K-car derivatives. Then when the market for larger RWD cars came back, they were worse-off than GM because they had NOTHING left in that segment.

That is generally true. When OPEC hit and CAFE came into effect, most people in the automotive industry believed (rightly so in the long long term) that the whole energy situation was forever changed and that cars were going to have to change. That is why GM invested so heavily in going FWD. Everyone expected the long term trend of higher gas prices to continue. The rapid drop of prices in the mid 1980s caught everyone off guard. It also messed up a lot of product planning as consumers began to purchased the larger older designed models in great numbers and well they were continued in production longer than previously planned.

An consequently, the models considered ‘collectible’ from the 1980s and early 1990s are all of the throwback models.

As for the previous comment about Ford and one car, you have to remember that when the Model T came out and then the Model A, that was a very early time in the history of the country. Cars were not universally owned as they are today. Financing was not developed as it is today. Then of course you have the Depression and other economic downturns in the early part of the year. Unless you had a lot of money, you could not be as discriminating in your car purchases as you can today. Ford also had other problems during the 30s and 40s mainly having to do with Henry Ford I
‘s autocratic management style.

Yes I do not really have a rational explanation for how Saturn progressed since I was not particularly involved in that. Off the cuff I tend to think that as the 1990s wore on when the economy boomed and gas prices stabilized buyers were gobbling up SUVs and multipurpose vehicles and small cars were less a priority. SUVs became so hot that even the European and Japanese companies that had been historically known for either high end performance cars or small cars began to develop SUV vehicles to compete. I would not be surprised if a rather high percentage of Mercedes sales, by unit in the US, is with SUV and crossover vehicles. The traditional Mercedes vehicles, the E & S class vehicles are probably only a small percentage of sales by volume.

Of course you probably already know this, that Saturn was predominately pushed by Roger Smith. So I guess we can credit Saturn’s early success to him? Had GM continued to invest in that brand would we have acknowledged that?

Dave M.

Posted May 25, 2013 at 8:59 PM

I have to disagree with Saturn proving GM could do it when they were unfettered from the static. Saturn proved GM could be adept at marketing and customer service. While I have no doubt that they had many thousands of satisfied customers, at no time was the Saturn product the equal of a Toyota or Honda, or even Mazda or Nissan.

Saturn was a success for GM at least for a while, to the point that many Saturn buyers did not realize that Saturn was part of GM. It was so separate that the entire service operation for Saturn was separate from the other brands. Historically, while individual branded dealers tended to specialize in the parts and servicing of their specific brand, the dealer could always conceivably order parts for any GM make vehicle. Especially when the ordering system became computerized, all of the parts catalogs were universal. Non Saturn GM dealers were not able to easily order Saturn parts since their parts and service information was separate. Some of that was done deliberately some of it was just circumstance since Saturn did not share many parts with non-Saturn vehicles (until the end). Saturn franchises were initially issued as stand-alone dealerships although frequently part of other GM franchise groups. As Saturn began to be wound up, the franchises were linked to a non-Saturn franchise to facility ongoing warranty and servicing.

IMO, Saturn could have continued a successful brand if GM had not of scaled back its investment. Between cash flow problems, and increasing sales of larger vehicles when gas got cheap in the 1990s Saturn was somewhat deemphasized. They did well with what initially was one car (S model) and then two cars (L model) before things started to get mixed up and Saturns started to be badged on platforms shared with other divisions. Limiting the vehicle selection to a couple of specific (smaller) models could have preserved the uniqueness of the brand and it likely would have survived into today. Remember, there have been other makers that survived on a selection of small models, VW lived almost entirely on sales of the original Beetle and subsequently the Rabbit until the mid 1980s in the United States (almost dying here a couple of times in the process) until the mid 1990s when they started investing in larger models and trying to turn themselves into something of a premium economy car maker. Honda has more or less lived off of the Accord and Civic for the bulk of its sales and Toyota the Camry and Corolla (until Lexus and even now the bulk of Toyota-brand sales are those two models).

As far as product, the Saturn was competitive enough to satisfy most buyers of smaller vehicles. I do not see Saturn suffered in any particular way specifically due to product failure.

jpcavanaugh

Posted May 30, 2013 at 11:10 AM

What I always found interesting about Saturn was how it was set up with much the same kind of autonomy ALL of GM’s car and truck divisions used to have. And, when it had that autonomy, it was fairly successful, certainly had a unique identity that was not “generic GM” as the rest of the company had gone. Then, the autonomy went away and Saturn became “generic GM” too. With no better results than any of the other nameplates (that had once upon a time been called Divisions).

Guy Ulrich

Posted April 23, 2018 at 8:41 AM

Has what I’ve read in other books been wrong? You all say Saturn was successful yet I’ve always heard Saturn was a financial black hole.
One joke mentioned specifically that supposedly made the rounds was that GM would lose less money if they simply gave a Chevrolet for free to anyone who wanted to buy a Saturn. Is that wrong, I’m curious.

Eric VanBuren

Posted May 30, 2013 at 11:06 AM

I guess it depends on your definition of successful and competitive. Everything I’ve ever read indicates Saturn lost money in all but one of the years they existed. Thanks to the way they developed it by bench marking Japanese cars available when they started they were out of date when they hit the showrooms and the competition had moved on. GM even admitted that they spent so much money developing them, they didn’t sell well enough to recouple those costs, so they had no choice but to keep selling them with only minor updates well beyond their “best by” date.

On the one hand considering all that was wrong with the rest of GM it made sense to develop them in a vacuum but on the other hand making every nut and bolt a Saturn nut and bolt meant they spent way too much developing the car. Despite the other problems there were still GM divisions producing some of the best in the world components that were even in demand by other automakers. The buy wouldn’t have known the difference if they shared things like alternators, starters and AC compressors with other vehicles.

GM’s investment in Saturn was a boondoggle. It lost billions on Saturn, and all it did was prove that GM was incapable of changing its corporate structure and cars to address the changed circumstances of the market. It sucked away development money, so that the Cavalier rotted slowly on the vine.

It proved that the power of marketing and pre-social media hype could effectively dupe buyers into thinking that Saturn was really something different and “special”.

And of course, it started becoming irrelevant when the heart of the market moved away from small cars to CUVs and such. Nobody anticipated that, right? Things never change, right?

I know this sounds like 20-20 hindsight, but I have former employees from back then who who will attest to my saying at the time Saturn came out: “This will fail”. Why? Because it was Roger Smith’s brain fart, and he hadn’t ever really thought it through. I was convinced the man was determined to have a batting average of as close to zero as possible, and history has proven it to largely be so. My personal GM Death Watch was then already some years along.

Nobody was prepared for OPEC. There really wasn’t any way for anyone to argue that you COULD have been prepared. It was just one of those things that happened. Sometimes when stuff happens, some are in a worse position to be affected by it than others. OPEC, and CAFE, hit GM hardest than any major car maker because they built volume large models. The Japanese brands, and most of the European brands, built almost all small cars. They built small cars not because they planned for an eventual OPEC, but because their home markets necessitated small cars and that was their natural base. American buyers had generally not taken to small cars, at least after WWII, except with certain demographics and the volume was small. So they got lucky, when the fuel crisis hit and buyers suddenly started looking for more fuel efficient cars, they bought every small car going, Vegas, Mustang IIs, and imports. So in a way, many imports got lucky in circumstance. That doesn’t mean that they were not worthy cars in their own right, but there is no disputing that circumstances aided their entree into the market.

Very few times in history are companies confronted with such a sudden situation that changed their entire basic rationale. The closest I can think of in modern times is RIM (Research in Motion) that all but invented the “smart phone” and dominated smart phone sales in the same way GM dominated car sales. Eventually competitors came out with models of their own that stole market share. RIM is fighting back with their new Z10 and Q10 models which may help them rebuild but they will probably never enjoy that level of domination again. The iPhone is currently the most popular product, but it too has succumbed somewhat to competition from the Droid, Samsung, and others. The smart phone market is much like the auto industry today, dominated by 4-5 major companies but none having an overwhelming market share.

The difference with RIM is that there was no OPEC equivalent with RIM, they just rested on their laurels and made poor product decisions and the market took off in a different direction. Same with Commodore, which once had 50% of the home computer market, yet today doesn’t exist.

Yes I did not mean to imply that there was an OPEC-like event in the smart phone market, but more so in saying that today, with globalization and everything else, that it is virtually impossible for a company to maintain an extremely dominant market share position in a broad line industry because eventually other players will enter the market and buyers will shift. Some items like cell phones tend to be influenced by fads but mainly once competition enters a market, it becomes difficult to recreate the factors of dominance. GM was able to dominate after WWII because, well one they swallowed up a lot of car companies early on, but of course there was not effective import competition because Europe and Japan were rebuilding from WWII. Of course the other world powers at the time, the Soviet bloc, served only internal customers.

There was also such an insulated culture at the very top of GM, John DeLorean talks about it in “On a Clear Day you can see General Motors”. He has an entire chapter about “The Fourteenth Floor” which was the top floor of the General Motors building in downtown Detroit, where the elite of the elite of GM brass would meet and count their money. I remember the line from the book, moving up to the 14th floor meant that if you weren’t a millionaire already, you soon would be(DeLorean’s salary in 1970 as the head of Chevrolet was $650,000…..think about that in terms of 1970 money for a moment).

Upper management was a no outsiders club, these were people brought up through the GM system, every day at a certain hour they turned towards the massive 2 story tall red neon GENERAL MOTORS sign on the top of the buidling and they would pray. The “GM WAY” wasn’t only the right way, it was the ONLY way to do things, after all, whose going to argue with GM?

There is a lot to this. I was a GMI student 1984-86 and worked at Delco Electronics. I got to visit several automotive plants during this time. When any auto executive looked out his (/her) window, all they saw was a sea of 0-5 year-old American cars – this was the case at every auto assembly and parts plant. They weren’t looking at the freeways in Los Angeles, Miami, Seattle and other places where foreign cars were becoming increasingly popular.

I still remember walking through the Delco plant complex (now essentially empty) and seeing the workers busily painting every forklift barrier and wall – that was how you knew that the top brass was visiting soon!

A couple of points: The Vega, which long predates OPEC, was the prophet of GM’s problems to come. It showed that the corporation was not properly organized to bring a fully fleshed-out small car to the market. Instead of being given to Chevrolet. it was a developed by corporate Engineering, and forced on a reluctant division to build. A recipe for disaster, and a foreshadowing of things to come. DeLorean’s unhappy experiences with GM’s management structure and effectiveness were of course well known through his book “On A Clear Day You Can See GM”.

Other automakers also had to adapt to enormous changes. VW had to completely shift from its rear-engine cars to modern FWD ones. It was a wrenching transition, but they pulled it off very successfully.

And even Toyota (and the other Japanese manufacturers) had to make huge changes. Except for Honda, all the Japanese were set up to build conventional RWD cars. Their transition to FWD was also momentous, if perhaps not quite on the scale of GM. But every one of Toyota’s three all-new fwd car platforms (Tercel, Corolla, and Camry) arrived without any significant shortcomings. That’s the huge difference from GM.

GM (along with Ford and Chrysler) typically released new products that simply weren’t fully fleshed out. In the eighties, that applies to just about every single GM new product/engine. There’s a reason why it’s quite rare to find existing survivors of the first year or two of GM products nowadays. Over time, most were improved, and some became quite durable indeed (A-Body, etc.), but in each case, the poor introduction turned a significant number of buyers away to the imports.

This is another aspect of GM’s hubris: for thinking that they could completely re-do their product line to FWD in just a few years (1980-1985), but the initial shortcomings in just about every one of them were crippling blows. I realize that it was a gargantuan undertaking, but perhaps it just needed to be stretched out on a longer timeline, or with greater commitment to quality controls and extensive pre-production testing.

And GM missed the boat with design in the eighties. Ford embraced radical change, with very euro-oriented aerodynamic design, while GM designs became very blocky and profoundly undifferentiated among their brands as well as between their cheap small cars and their expensive models. GM was seen to be out of touch by a new generation of younger buyers who were just coming into their prime new-car buying years.

I could go on; and have, and will…. I do agree that GM’s dominant position and size made it very vulnerable to the kind if insularity that makes companies vulnerable to the changes in the marketplace, and that it was essentially destined to fail.

Here’s an interesting quote from Alfred P. Sloan Jr, made in 1964 in his book ” My Years With GM” : “Any rigidity by an automobile manufacturer, no matter how large or well established, is severely penalized in the market.” He was referring to Ford back in the twenties, but it was a very prescient comment on the future of GM.

Apropos the Vega, if you follow “Mad Men”, you’re aware that Don Draper’s agency has just won a big account for a car that we CC devotees would recognize as the Vega. So we know that if the series continues up to the point of the car’s introduction, they will be dealing (because Chevy will be dealing) with the PR mess that comes out of the Vega’s many problems. The car they’re trying to create ads for is supposed to be a revolutionary vehicle, and we know before the characters that this doesn’t really happen.

If you follow this weeks episode you see their frustration in dealing with GM’s layers and layers of management while working on the campaign for the Vega. At one point Don says, “tell them to call me around 1970 when they’re ready to make the thing”

The episode opened up with Ken Cosgrove being forced to drive a bunch of drunken Chevy executives around in an Impala while they fired thier pistols at road signs. Being exhorted to punch it, Cosgrove loses control and wrecks.

Eventually, perhaps, but I think it was more that the writing was on the wall. By the late ’60s, Volkswagen was really becoming very dependent on the fact that the Beetle was still selling strongly in America, mostly because it was seen as a cute counterculture icon. In Europe, the Beetle was sinking fast (I don’t think European buyers, particularly in West Germany, found it so adorable as Americans did) and the follow-on air-cooled models were great disappointments.

The popularity of the Beetle here — it outsold American Motors in toto — probably bought some time, and obviously VW still had capital, but it was becoming clear that that wouldn’t be true indefinitely. Also, Volkswagen in those days was still part-owned by Lower Saxony, whose government was obviously not eager to see the company fail.

That was perhaps fortunate because the transition was definitely not without hiccups. The Volkswagen K70, their first water-cooled FWD model (albeit based on a design acquired along with Audi’s purchase of NSU), had a lot of issues and wasn’t a great success, although it was probably a useful trial run.

WV chased death on multiple occasions, at least in the United States, being saved mainly by still being relevant in Germany and the European market. As Aaron said, the Beetle was hugely popular (relatively) in the US, but was seriously overplayed by the mid 1970s and the other vehicles were duds. Then came the Rabbit which again became somewhat overplayed after a while and various ills related to production in Westmoreland, PA tarnished the image somewhat. They introduced the Gold/Jetta that were moderately popular sales rose a bit but started to slide again until about 1992 or so when WV America was on life support. They decided to invest heavily in a plant in Mexico to support vehicles intended for the North American market. Production and sales rose, but most observers believe that WV quality began to decline, especially with product coming out of Mexico. It never got bad, but it was nothing like the halcyon days of product from Germany.

As we know, except for Mercedes and BMW, higher end niche cars, most of the mainline European makes either died, withdrew from the market, or suffered along like WV did many times. What is interesting is that, in the US market at least, sales of import makes less than $40,000 is dominated by the Japanese.

An excellent piece, Craig and thank you for taking the time to write it. I learned a lot of things about GM from reading it.

What is missing is the absolutely poisonous relationship GM had with its dealers in this era and how it took its customers for granted. I didn’t get it first hand but we had an independent repair garage literally across the street from a big GM dealer and about 1.5 km from another. The horror stories I both heard and saw were quite frankly shocking; I had been raised in a GM family and had always seen GM as practically infallible. Then came along stuff like the THM200 and the FWD cars. Sorry to say but compared to the Japanese competition, the cars were junk. GM should have bent over backwards to make its customers happy, but it didn’t.

The so called “Greatest Generation” snapped up GM cars without question until about 1980, when they started to expire (as most didn’t have the healthiest of lifestyles). Baby boomers got tired of permanent car payments and bought imports instead. Really, GM should have done radical surgery then and not tried to sell the same car at several divisions. Failure to do so led to the slow motion bankruptcy that now seems to be forgotten.

However the worst part of GM was their cynicism. I remember GM execs bragging they had never driven an import. It was a classic case of insular thinking and even GM of today is still doing it.

I will never, as long as I live, ever buy a GM car again after the way the dealer treated me on the last one I bought. Never, not if it were given to me, would I drive one.

Your Greatest Generation paragraph seems to hit the nail on the head for me. Small cars from GM were woefully bad one reason or another for nearly 15 years starting with the Vega. How GM thought all those first-time new car buyers would ignore the problems it, and the succeeding H and X cars would give their owners, is beyond me. All this during a period where the Japanese were making leaps and bounds upwards in regards to real and perceived brand quality… By the time the Js and As were “arguably” sorted out, it was mostly too little, too late. (As an aside, my parent’s first new GM, an 85 Cavalier type 10, was on it’s third clutch @ 6 years and 64,000mi on… The 86 Trooper II bought new we all drove as well still stick-shifted along with no trouble when we departed with it in 96 at 130,000mi so not operator error there… After that Cav, they never went back to GM again.)

Interesting article. I don’t have much authority to speak about GM’s business practices, but I will say this: I never had the impression that GM’s managers had ever actually owned, or maybe even driven, the small cars they tried to foist on us, from the Vega through at least to the Cobalt.

My last GM car was a ’78 Malibu wagon, purchased new. Not a horrible car, but very poorly assembled and not very durable. Got rid of it after 2.5 years and haven’t touched the marque since. Don’t really intend this to be yet another GM bash-fest, so I’ll stop there.

I’m reminded of what Car and Driver said of the Vega when it first came out. They got the impression that it was a car designed to hit specific objective benchmarks in proving grounds testing, which it did, but that subjective considerations had gotten short shrift. Between that and the cost-cutting that a lot of these cars ended up undergoing (well-documented in the case of the Corvair and the Vega), you can see how a car that looks good on paper ended up not working out as well in the real world.

It’s also interesting to point out that Car & Driver readers and staff voted the Vega best compact car for like 4 years in a row too.

Canucknucklehead

Posted May 21, 2013 at 9:17 PM

Gee, a Buff Book shilling for the largest advertiser in North America, one that actually cut Car and Driver off after the infamous Opel article. Whodathunk that a GM product would make car of the year! What was the competition? Well, the Pinto and the Gremlin would pretty much sum up the massive competition. Having had the misfortune of driving all three, the Vega was actually the least bad of the lot. The later ones were not nearly as horrid as the early ones, either.

Sam

Posted May 21, 2013 at 10:46 PM

Motor Trend also called the Vega their Car of the Year in ’71, which Car and Driver now calls out as one of the 10 worst automotive awards ever.

Their road tests of the Vega do make their rationale pretty clear. It was not that they were oblivious to its flaws (excepting the engine issues, which are the sort of thing that don’t usually become apparent in a short-term road test of brand-new cars), but that the editors found most of the obvious rivals as flawed or more so.

In Car and Driver‘s 1971 comparison of the Vega, Pinto, Gremlin, Corolla, and Beetle, for instance, they complained that the Vega was noisy, had a three-speed transmission that felt like a five-speed missing two gears, and wasn’t a great joy in most subjective terms. However, it was among the most fuel efficient, had decent acceleration for its type, handled well, felt like it would be endurable for a longer highway trip, and didn’t look like a dumpling; each of the other cars tested could manage some but not all of those things. (Unfortunately I don’t think the test included the Datsun 510, and while I would have been very interested to see a side-by-side comparison of the Vega and the Opel Ascona/1900, I don’t think the latter was available yet when they did the test.)

CARMINE

Posted May 22, 2013 at 7:19 AM

Car & Driver in the 60’s and 70’s hadn’t yet become “Accord & 3 series Monthly” that it now has become, C&D was kind of the Gonzo journalism car magazine. C&D GM had and adversarial relationship ever since their really negative review of an Opel 1900 wagon in 1969, GM pulled all of its advertising from the magazine, so they weren’t kissing ass, and it was a READERS choice survey as well.

Unlike most Japanese imports at the time that the Vega came out which were billed almost strictly on economy, the Vega was billed to be no only economy but stylish with a certain degree of performance. Equipped with the 2bbl engine, F41 suspension, the upgraded tires, the car was quite capable for its size and given the competition. The car, even today, is widely regarded for its handling. Of course its styling a cross between the Camaro and the Fiat 124 coupe, was better than the typical import at the time. So the car had a lot of potential.

The Vega, while being RWD, ended up being a victim for many of the same reasons that the X cars did. When GM came out with the Vega, so many things were new, processes were new, that it overwhelmed everyone and mistakes were bound to happen.

The Elpo dip process, the source of many complaints about rust in addition to the lack of a fender liner, was brand new. Eventually it was refined and is the process that is used, more or less intact, today. Side post battery debuted on the Vega so that the cars could be tilted nose first for transport reducing spillage. The 100 unit/hr assembly line. All of these things hit at once and it was a monumental task to implement and manage at all times.

My father is at the trailing edge of the Greatest Generation and he switched from GM to Toyota in that year of 1980. Why? He was about to trade in a Cutlass for another when, in the showroom, part of the interior of a new car fell apart in his hand. Accross the street was a Toyota dealer. Its still there, Obviously, the Olds dealer is gone. He probably paid more for the Supra he bought, but the car was so good he never looked back.

Very well done, Sir. Thank you. I expect to read this sort of stuff over on TTAC, but they seem to have their shorts in a wad right now for reasons I can’t see…

After the mid/late 1970s, except for the 1977 B bodies, I began to HATE GM and went to AMC in 1977. I then went to Chrysler in 1981 and we bought our first K-Car.

Reason? I knew it was relatively new technology, but the basic drivetrain I felt was better developed than any other domestic OEM – plus, I wanted to at least do a tiny part to help Chrysler, which was in dire straits at the time.

The GM X Bodies and the Chrysler K Cars are an interesting comparision. If I remember correctly, they were released about a year apart (the X cars first), were roughly the same size and similar configuration. Sales of the X cars were huge at first, probably outselling the K cars for a year or two or three.

But the K cars marked a turnaround for Chrysler and gave them a platform that spawned a variety of cars for years, including the minivans that saved the company. The X cars were a disaster for GM and marked the first of many stumbles in their transition to FWD.

There’s probably a CC post to be written comparing and contrasting the two. I don’t know enough of the history to write that post, but maybe someone else does.

I’ll also stand by the fact that along with the other entire truck load of issues that GM had to deal with, the UAW assembly line workers were part of the problem with the quality of cars generally going to **** after 1970 or so, an accelerated problem when the baby boomer generation started getting into the work force, these were the people that hated everyone above them, hated their jobs, the guys that would show up to work drunk, get stoned at lunch and throw nuts and bolts down into the deepest parts of the car during assembly to create rattles, and then go to sleep behind some parts for the rest of the day.

I, a card-carrying baby-boomer, now 62, agree with some of what you say. I only hated those above me who were self-righteous and jerks – they come in all generations and age groups – many were mentors in one way or another, and I didn’t hate my job.

Perhaps you’re referring to assembly line workers? Yeah – I knew a couple of those, too – in and out of the auto industry! I have and could tell a few true tales about the Fenton, MO Chrysler assembly plant back in the early 70’s where a buddy of mine worked for a year or so!

Well the “Greatest Generation” carried many of the traits that the current Japanese culture does, a respect for age, seniority, and paying your dues. When you lived through the twin events of the Great Depression and the WWII, the effects and impacts of those lasted forever. The Baby Boomers were the first generation (except for those in Vietnam) to have really lived what we otherwise think of as “the American dream.” They often grew up in suburban households, many had a chance to drive a car early on, had modern conveniences, record numbers went to college, even non-college aged graduates were able to find decent employment at least early on, and the social changes of the 1960s opened up a lot of social opportunities. So it was sort of like being let out of prison. Drugs, rock and roll, birth control, freedom meant celebration. A lot of social mores were shattered after the 1960s. Probably for the better long term, but created a lot of short term consequences as described.

Of course, the UAW issue affected all U.S. manufacturers pretty much equally. Even so, there was often a wide range between the best-assembled cars and the worst, and Chrysler was often at the bottom here. Still, I have understood that GM did not always have the best relationship with its hourly workers.

Product quality is largely a function of design and the assembly **process**, which are management functions.

Toyota innovated the production side of the business. They did a fundamentally better job of building reliable cars than had anyone who had come before them. Honda jumped on board, but much of the world was slow to copy them (and it wasn’t easy to copy.)

What Toyota did was to completely change the game. Lean production substantially reduced the defect rates that had been accepted as the norm for decades. The domestics didn’t get worse, they just failed to progress when the consumer began to expect progress.

Final assembly plays a huge part of the quality equation. If the assembly line works are unhappy they will “forget” to put all the bolts in or tighten all of them properly or call the seriously out of alignment panel “good enough”. If the management is seen as the enemy or too strict that means if they do accidentally mess something up they won’t dare stop the line to fix it or make a note of it so it can be fixed off line. If relations get real bad then the assembly line works will turn to sabotage, leaving empty beer cans inside panels or hanging a nut from a piece of fishing line deep inside an area that won’t be accessible after full assembly.

In a lean system such as what Toyota pioneered, QC takes place throughout the assembly process.

In a traditional mass production, QC is largely left to the back end of the process.

Traditional mass production produces a higher defect rate because it is more difficult to identify problems if nobody bothers to look for them until the car has already been built. Cars are made of thousands of parts, many of which are hidden away, which guarantees a high defect rate.

A properly managed assembly line would have found the beer can in the door and removed it long before it did any harm. (As an added bonus, the culprit could be determined and dealt with appropriately.) But the traditional mass production approach, invented by Ford and copied widely, emphasized throughput instead of defect rates. This is ultimately a systemic problem, and it’s up to management to fix it.

Eric VanBuren

Posted May 21, 2013 at 2:27 PM

“The assembly process comes from management”

Yes and no.

Sure management can put processes in place, but as long as there is an adversarial relationship between management and the assembly line workers those processes won’t make any significant difference.

So a lot of it comes down to the culture and that is not something management is likely going to be able to change on their own once it has become entrenched.

Pch101

Posted May 21, 2013 at 2:48 PM

“as long as there is an adversarial relationship between management and the assembly line workers those processes won’t make any significant difference.”

That came from management, too. Culture is likewise a management phenomenon.

Lean production lowers defect rates. Go learn more about it, and who lead the way with innovating it.

Yes, and the speed management specifies for the line can also have a big impact on quality. If line workers are required to cut their time-per-operation by 30 or 40 percent (not necessarily uncommon), it really doesn’t leave a lot of room for fixing problems even if they develop. If a program is also rushed tot he point where there isn’t a lot of time to work out the bugs in the tooling or minor design flaws, that becomes compounded.

There is a splendid British examination of the labor issue by a professor named Theo Nichols called The British Worker Question, published in London in the mid-80s. It’s obviously dealing with the U.K., and not solely with the auto industry, but it’s very readable and offers some very useful insights on this area.

Eric VanBuren

Posted May 21, 2013 at 6:09 PM

To a certain point yes the culture in a company does come from management put it also comes from the culture of the community as a whole. In the case of the automakers a large part of the adversarial nature is due to the union. It is sort of a catch 22 w/o the adversarial culture there would be no need for the union and w/o the union there wouldn’t be a reason to perpetuate that adversarial culture. A lot of it does go back to the culture of the community however.

Pch101

Posted May 21, 2013 at 7:36 PM

“If a program is also rushed to the point where there isn’t a lot of time to work out the bugs in the tooling or minor design flaws, that becomes compounded.”

And traditional mass production compounds this problem by creating large inventories ahead of production, which means that mistakes will often already be built into thousands or tens of thousands of parts before the fact.

When Ford invented the assembly line, he and his colleagues were under the impression that standardized parts alone would be enough to produce a quality product. The first assembly line didn’t even have a QC process at all.

But then the first cars off the line proved to be pretty bad. Given how the system worked, the rework department was put at the end of the line, to fix cars that had already been built. Stopping the line was unthinkable — it had to keep moving in order to amortize the costs down as much as possible.

Toyota realized that this approach was prone to creating defects that would be hard to fix after the fact. By having QC throughout the build process, defects could be fixed before the end of the line. By building parts in smaller batches, design flaws could be fixed earlier.

The culture that will make or break such a system comes from management. For a lean system to work properly requires that employees not be treated as second-class citizens and that managers be more responsive to concerns on the line.

The mentality at the RenCen is going to be inherently hostile to such ideas. Nobody at the top wants to surrender power or trust the worker. GM gets the union that it deserves.

Early Vega production in Lordstown was actually very well done. As you can read from various online sites and DeLorean’s book, when Chevrolet still controlled Lordstown, he had teams in place that were on the assembly line dealing with issues related to the new 100/hr unit production. When GMAD pulled control of the plant from the division, those special teams were let go and problems were handled internally. Had the teams remained in place, many of the production level problems would have never surfaced.

Sometimes problems are pure production, some are engineering. A good case study, at least for me, is my 1981 Imperial. It has many known problems, mostly related to the fuel injection, system, but the build quality is absolutely first rate. Even to this day 32 years later, that car feel more solid than just about any car that I have ever driven. I have pretty much engineered out any problems with the fuel injection system, so it performs pretty much as designs. It is dead quiet inside. Going over bumps even railroad tracks are hardly even felt. There are no squeaks, rattles, or other noises of degradation. The Imperial was built in Windsor with a high degree of attention during the assembly process and Imperial employees all had seniority of 20 years plus. Major components were all hand selected and are all marked with a unique pentastar symbol.

Aside from it being a bit slow, the 2.21 axle ratio and the choked 140hp 318 V8 in a heavy car, it is very Mercedes like in its solid brick feel. Of course its opulent interior is over the top. I dare say that enjoy driving it more than most of my other cars simply because it is a tank and a very attractive one at that. One day I have designs to switch the rear end to a 3.55 Sure Grip, because it won’t affect the cars AACA status, but will improve the off the line acceleration markedly while reduced highway MPG only marginally.

I don’t think the “Dang Hippies” hypothesis really holds water. It’s more about a history of bad blood between Detroit and the UAW, with ugliness and mistrust on both sides. Baby boomers have built a lot of CamCordTimas in the US without Big Three-style craziness. Saturn and NUMMI even did ok with a unionized workforce, so that can’t be the deciding factor either.

NUMMI took an existing GM plant and UAW workforce in Fremont, California, with some of the worst labor relations in the system, and turned it around with a Toyota-led revolution in management culture and practices.
If only GM weren’t too arrogant and hidebound to actually learn from, and widely implement, the experience at NUMMI and Saturn.

NUMMI was an improvement. However, I hated the way the Nova looked. It was too small for my personal tastes and the whole hatchback thing isn’t my thing. If I wanted a Toyota-esque car I would have bought a Toyota.

I really disliked when GM did that. I like GM when they built cars that looked like GM cars.

Sales figures and profits have nothing to do with having “lost their way”. At this point they are just like GM in the 70’s riding on their reputation and ever increasing discounts, in the case of Toyota, to hide the problems. Toyota has been buying the title of best selling car in the US for a couple of years now. When the 2012 Camry was introduced the prices were dropped across the board, in some models quite significantly. Despite that they are continually offering deep discounts, at least in my area, yet they still can’t move the metal.

I just did a search on Cars.com for new Camrys within 10 miles. They still show 7 yes, 7, new 2011 and 14 new 2012 in stock. Meanwhile expanding the search area to 100mi results in no 2012 Malibus let alone any 2011, while there are 3 2012 Fusions and no 2011s in that 100mi radius.

So far I have yet to be convinced that Korean cars (or German for that matter) are generally any more reliable than domestics; if these were my only alternatives, I’d buy American for hopefully cheaper parts.

While I think the Japanese have slipped a bit since the ’80s, I still trust them the most.

I travel a lot for my business and I get a lot of rentals and I can without reservation say this: Korean cars are not as good as Japanese cars. Sure, they are 8/10th of a Japanese car and the have a significant initial cost advantage and that is good enough for most buyers. But not me.

Perhaps Japanese cars have “slipped” since the ’80s but one must take into account that practically every other car has vastly improved. Japanese cars are also much cheaper now than before, especially here in Canuckisan.

You do see alot more modern cars than I do no doubt about that but there are a few things that I see that bother me about Toyota in particular. I manage a tire store that is a part of a farmers coop in Arkansas and The Toyota trucks arent the same quality and are alot bigger than the ones from the 80s to mid 90s (and yes, I mean the Tacomas too). Also, if you ever changed oil on one you would never want to own one. A GM truck takes about 15 minutes tops, Ford about the same. Dodge? We really dont consider the new ones “real” trucks. They are just huge and heavy.

Imports have typically always been harder to service and often more expensive as well. Part of why I still keep my 20yo Buick Century around with almost 300K is that it is so cheap to insure ($25 a month), is reliable, gets decent mileage, parts grow on trees and I can fix it in my sleep. Its Cuba-style car maintenance keep it going no matter what.

Interesting perspective, as I feel that the current Hyundai Sonata is a far superior car to the current Toyota Camry, at least from the cars that I’ve rented during business and personal travel. The Korean machine doesn’t feel as disconnected from the road as the Camry, it’s got much better brakes, and a better stereo. Interior materials were subjectively better, as well.

Maybe the Hyundai won’t hold up after 150k miles but they seem to take 20 or 30k of rental abuse pretty well.

While the rot grew from within, the giant edifice remained seemingly invincible – and everyone wanted a piece of it. From the top management – their high wages were only a slight nuisance to such a huge enterprise; but the message it sent, that of leisure and contempt for the end-user and a mindset of taking, not producing – set the corporate culture on the road to ruin. Everyone down to the maintenance and custodial staff, to the most junior sales guy at the smallest dealer…was concerned first, foremost and only with, What can I GRAB out of this?

It’s the natural life-cycle of organizations. They have their births; their growing periods; their maturity…and their deaths. GM’s brands and properties could have been born anew a few years ago…it would have been tough, given the lingering economic slowdown. But the resultant operation would have been lean and mean; and the corporate culture would have been aimed towards survival and growth, not personal larceny.

I have experience with this. As a new railroader, I went to work with recently-privatized Conrail…the railroad made out of the bankrupt Northeastern lines. By then, Conrail was making huge piles of money…but the corporate culture was, to run scared. To always think of moving freight; to fear missing connections or customer demands.

It was an interesting way to see the 100-plus-year-old Pennsylvania and New York Central railroads, literally born again.

GM could have done this. Instead…I don’t want to get into politics. Let’s just say the road not taken would have served them better – as the institutional costs and much of the deadwood remain.

It wasn’t so much that there was rot inside, but the company grew so large and so programmed to do things the way that they always done them that it was unable to turn around in any effective way at any effective speed. Sort of how they describe the Titanic, it was so huge at the time, and yet apparently as many believed, ill equipped to handle and emergency that we got the tragedy. By the late 1970s, mostly of the people at the company had only know life post WWII with big relatively simple RWD cars body on frame built much slower.

There was more. The corporate culture was a toxic mixing of insularity and arrogance. Not only did they not have experience with smaller cars or high-quality standards; they had zero interest in them or in any other difference or innovation.

Thirty-five years before GM filed for bankruptcy, David Halberstam documented this attitude in The Reckoning. Then-top GM brass thought their underlings ought to learn something about the Japanese industry…not they, the top, but their lower-ranking people. But the presentation they hired had to be cleared with GM censors, which neutered it down to the level of a PBS early-evening documentary…here are these quaint little people, and hey! they make cars, too!

GM was simply NOT INTERESTED in learning how others did it; not until they were deep in their spinning descent, and not really even then. NUUMI was an opportunity; an opportunity the GM culture poisoned. NUUMI-trained or involved supervisors were pariahs.

That is a bit drastic and not entirely cut and dry. I have no doubt that the 14th floor types were insulated and living in a bubble to some degree, that came about partly from a couple of things namely:

1) Most of the creative people were in the division level. Only a handful of real car people wanted to work in corporate since it meant being away from the farm so to speak. Some jobs like VP of Styling were coveted because they were visually influential (obviously) but by and large most of the corporate jobs were administrative;

2) Up until the early 1990s, most of the senior people at GM were of the WWII generation. Those guys spent their youth fighting off the Germans and Japanese in wartime situations and memories are long. My father was in Korea and while I consider him an open-minded man, he has little interest in Asian anything partly for that reason. While buying cars strictly for patriotic reasons is not what it used to be, there is still a significant portion of the population in the US that will profess a preference to American labeled products for that reason. While this point can take the conversation beyond the scope of this website, it is still valid. http://www.pamallison.com/2012/04/02/us-car-industry-who-is-buys-domestic-vs-imported/ That is born out by the fact that while some places, like the industrial Midwest buying domestic is to be expected given the proximity to the industry, when I was in Kansas at the beginning of May, driving I35 and in the small towns that a visited, you were hard pressed to find an imported make anywhere. I think we have reached a point now where we have something of a market equilibrium. With GM, Ford, and Chrysler generally financially stable now I do not for see the imports gaining significant market share in the US in the near future.

3) Not everyone was living in a bubble. I for one (while I am semi retired now) call myself someone who has tried to keep up with things as they have evolved. In our Service Operations group, we regularly purchased and serviced vehicles of all makes and models to study their design and serviceability. I think in that regard, most people are wrong. GM did not sit by idly and build the same kind of cars that they had always built over the years and watch their market share wither on the vine because they were unable to change. If anything, GM probably changed TOO much and TOO fast for it all to be executed properly. As I said in the piece, if you look at the model situation in 1979 versus 1982 you will see an almost unprecedented change in focus and design. The mere fact that GM all but committed to have all of its cars go FWD by the 1985MY was influential in itself. While GM ultimately lost market share over time, it would have been quite something to see if GM had made the decision to not go wholesale into FWD and bet to continue to build large RWD cars as they had been accustomed to and then had the price of gasoline drop as it did in the 1980s. In some ways I wish that would have happened, as it would have created quite the dichotomy in the market place. GMs decision to go FWD across the board was largely in place by the time gasoline had begun to settle down in 1982. So while we enjoyed stable and relatively cheap gas prices until the 00s, GM was already too committed to FWD to totally scrap the problem. Plus, it was thought, that if a large company could take larger vehicle FWD, like the C bodies, then it would add prestige and value to buyers who at the time viewed FWD as the strict purview of small and inexpensive cars. It is ironic, how today, that view has changed back to the point that most luxury and near luxury cars are RWD…

So really there are two pertinent questions, design and execution. You can design a car that everyone loves and often times it will sell well despite some flaws until something else comes along. Sometimes you can build a poorly designed or bland uninspiring car well and it will sell to a segment of the population that values that efficiency above all else. Product and brand management is a multifaceted thing. People don’t buy Corvettes because they are the best or most reliable car ever made. They buy them because they are sexy and hell, perform well, and make them feel good driving it. On the reverse, there is probably no way to make a Corolla sexy no matter how much body cladding is installed or aftermarket junk from AutoZone is used. Corolla buyers will not tolerate any deviation from cheap, efficient, non nonsense reliable car, while Corvette buyers will likely put up with almost anything to keep their beloved car going. That is the only explanation for how European cars have a following.

So I DO feel that GM can learn from the Japanese and others on assembly design, actual putting the product together in the factories that minimizes costs and maximizes defects. With that said, I do NOT want to see domestic cars turn into Japanese cars in design and flavor. If I want to drive a Camry, I will buy a Camry. But I like my Camaro thank you very much.

In my opinion, the biggest factor was the overlap of brands. At one point, you had Chevrolet, Buick, Oldsmobile, Pontiac, Cadillac, GMC, Hummer & Saturn. That’s a whopping 8 brands, when really only 3 are needed.

I believe at one point, before the ’70s, each brand had its own identity. But things soon changed & the luxury brands tried to build compact cars when they should have kept catering to the upper-class who don’t want to own a tarted-up Cavalier. (Cimmaron).

Buick, Oldsmobile & Pontiac became the same exact car. Chevrolet starts offering the Caprice in 1966, which should have been a Buick.

An aging customer base. The public’s refusal to accept the end of the Brougham era & to buy more efficient cars after the 1973 & 1979 gas crunches. Terrible management.

The multiple brand strategy could work if the brands were highly focused and there were just two distribution channels, i.e. a mainstream channel and a premium channel.

For example, I could have seen a scenario in which one channel of dealerships sold Chevys, GMCs, Buicks, and Pontiacs, but with just a few cars per brand and no overlap, while the Cadillac dealer controlled the luxury cars.

What didn’t work was having multiple dealer channels selling 70-80 different nameplates, with each brand carrying its own comprehensive lineup. Badge engineering was inevitable, yet there is no way to create that many cars while keeping them unique.

Along the way, branding morphed into a nameplate-driven phenomenon, which GM helped to pioneer but was ultimately one of its greatest threats. GM could have avoided a lot of problems had it just consolidated these channels early on, when they had the money to pay for it. But that decision would have offended a lot of people within the organization.

“The multiple brand strategy could work if the brands were highly focused and there were just two distribution channels, i.e. a mainstream channel and a premium channel.”

One of the things I did not see mentioned in this discussion is the growth of multi-line dealerships in the 80’s and 90’s; first with a US domestic dealer paired with a foreign manufacturer, then more commonly with another domestic.
Sometimes the partner domestic dealer was another domestic brand but not same corporation (one place I worked for in the early 90’s was a Chevy-Plymouth outlet), and others were different marques in the same corporation. Then we can discuss the mega-dealers…

Much is said about GM having too many channels, but how does VW do it, then? They have eight or so, although not in the US. Regardless, if GM had the stones to have forced their dealers to toe the line WRT brand mission, I believe the individual brands could have survived.

But, due to a number of different issues, one of which is dealer influence, GM allowed the brands to become diluted. I’ve asked this question a number of times online before, but why did GM need the senior compacts that were released in 1960? Didn’t Opel, Vauxhall and Holden already fill that need? Wasn’t the failed “companion brand” experiment of the 1930’s enough of an example to management that brand extension without a difference becomes dilution…

One thing I will say about Chrysler under the Cerebus regime, is that they got their dealer strategy in line for the automotive New World Order. They managed to consolidate many dealerships into full line (meaning ALL Chrysler brands) stores before carmageddon. I don’t know if that was part of the overall plan to sell off Chrysler or if it was part of a plan to get Chrysler healthier.

But it turned out to be a good idea when battling the then-current Asian competition, which generally has the two-brand strategy. Marchionne and Fiat have come in and muddied the waters with the RAM (WTF?) brand and tacking on the Fiat Studios almost as an afterthought.

A few others on here have posted their mental masturbations about what a narrowly focused GM would have looked like while keeping all of the former brands. I can say I’ve fantasized about what I would do if I were head of GM marketing, but the reality is that the new GM is about as small as it’ll get. As much as I would love to see a 2015 Cutlass or a 2015 Bonneville, I know it “ain’t gonna happen”.

People like me will have to be satisfied with new Impala and the Verano. People like me will have to wait and see if Opel survives it’s current dilemma and maybe we here in North America can see a REAL Astra or Insignia prowling our roads, even if it has Buick badges on it.

Of course, people like me have the free will to see what other companies come up with, also. Methinks the future may be interesting.

“Much is said about GM having too many channels, but how does VW do it, then?”

In the US, there’s virtually no overlap. Bentley, Bugatti and Lamborghini don’t compete with the Jetta or the A4.

Where they do overlap are generally for niches, anyway. (Audi and Porsche SUVs come to mind.) But VAG’s brand avoid competing against each other in mainstream markets.

In Europe, it’s actually an issue, but it’s a legacy cost of sorts. VW bought SEAT when the markets were still closed; they didn’t anticipate that an EEC/ EU would knock down the intra-European trade barriers. Likewise, Skoda has probably gone too far up the ladder from what was intended.

The company that is repeating the GM mistake is Hyundai-Kia. Both brands are trying to compete against each other, and there’s little difference between them. That may not end well, at least not for one of them.

geozinger

Posted May 21, 2013 at 5:09 PM

I noted that VW does not compete with itself in North America, I didn’t make it clear I was referring to Europe with SEAT and Skoda. My bad. However, I think VW is in exactly the same place GM was with too many marques, even though no one cross shops an UP! with a Veyron.

Admittedly, I had not considered Hyundai/Kia, although they seem more like a Korean version of the Chrysler Corporation battles than a GM-style badge engineering fest. I wonder how much of H/K’s issues are dealer driven…

Pch101

Posted May 21, 2013 at 5:15 PM

Hyundai-Kia’s structure is a legacy of its history. Each brand was once its own company, and neither brand wants to suffer the sales loss that would come from differentiating themselves from each other.

It’s like Peugeot-Citroen. They merge for the sake of survival, while trying to keep the status quo between them. You can see how well that’s been going for the French.

As geozinger says, I’m honestly puzzled that VAG doesn’t have more issues in Europe and the U.K. with the overlap between Volkswagen, SEAT, Skoda, and the lower-line Audis, which do compete directly in price and features. For example, the new VW Up, SEAT Mii, and Skoda Citigo approach BMC levels of badge engineering: Except for grilles, badges, interior trim, and equipment, they’re pretty much the same car built by the same people with the same parts in the same plant.

Pch101

Posted May 21, 2013 at 7:54 PM

Europe may be a unified market, but it still has national borders and traditions of brand loyalty that don’t disappear overnight. So Germans are still loyal to VW, Czechs still feel an affinity with Skoda and Spaniards still buy SEATs, even though the distinctions are becoming increasingly irrelevant.

I think that you’ll start seeing more branding conflicts as time goes on. But these things take decades to emerge; the process isn’t quick. For now, the system still works — give it another 20 years or so, and more cracks may be begin to show.

The US does not have the intrinsic loyal to a brand the same way that many Europeans and Asians do. Many Asians by Asian products because it is considered the appropriate thing to do. The products themselves may be decent but the loyalty goes beyond that. If you think GM execs were mistaken to only drive GM products, I am sure the same is true on many levels at Toyota. Given the market share that Toyota, and the home brands have in Japan, there are probably large segments of the population that have only ever driven one brand.

Also, in Europe the labor situation tends to lend itself to loyalty since, despite all the crowing about the UAW in the US, labor in capital industries in Europe is even more entrenched. The government plays a far greater role in market protection and benefit remuneration than in the United States. I won’t get into politics, but social benefits are a big factor. Also, the populations are smaller and the ethnic divisions more defined unlike the melting pot in the US so people are more apt to stick to their kind.

This turned the whole original Sloanian structure on its head. Keep in mind that in the twenties and thirties, there were almost zero options, except maybe a heater or such. The pre-war Sloanian structure only made sense in that kind of environment, were the brands didn’t overlap, and pricing was much more stratified.

This is why DeSoto and Edsel died, and why Dodge went down-market. GM maintained its five brands purely because they could afford to due to their huge volume. To a large extent, they were just trim variations of the same car. Yes, they had engineering differences, but did 95% of the buyers really know or care? A V8 is a V8; an automatic is an automatic.

GM’s divisional structure, which so many car nuts like us have fond memories of, was an albatross starting in about 1955. Of course they couldn’t get rid of it, but it turned into one of their biggest problems as market share declined. There just wasn’t enough genuine differentiation.

Ford went a very different route, and they set the die with their 1958 Thunderbird. That essentially negated the purpose of Mercury’s existence, and Mercury was mostly a weak brand awaiting its day with the executioner.

Essentially the same thing happened at Chrysler: the compression of the market killed Plymouth.

All of this turned out to be a boon to Ford, which was better able to adapt a single main brand (plus a luxury brand), like Toyota and the Japanese.

Sloan’s structure made sense in the pre-war era, but it became irrelevant in the post-war era. Getting out of it was the problem….

FIAT is betting big on the multiple-niche-brand approach. It even went to the trouble of inventing Ram when it wasn’t strictly necessary.

The approach contains certain advantages and disadvantages. But if it is going to have a chance, then the individual brands have to remain tightly focused. That probably requires having multiple-brand stores as a matter of design so that there is no pressure at the retail level to broaden the lineups for the sake of giving them more cars.

I still have to wonder if spinning off RAM is a prelude to shuttering Dodge.

geozinger

Posted May 21, 2013 at 6:42 PM

@Aaron: Yes. I think you’re correct in that. THIS is where I think that people are wrong to hail Marchionne as some sort of genius. Even though raised in Canada, he seems to not understand the importance of the Dodge brand. Chrysler may have a bigger market in Canada, but in the US, it’s all about Dodge. Even more so than before, without Plymouth to hold down whatever lower end competition there is.

Of course, the other way to view this is, you can take some of the lousy CAFE scores away from Dodge division, but that hardly seems like a good reason to do that. Regardless, Dodge is the “big generator” (of money) in the US for Chrysler Corporation. Sergio needs to remember that…

Pch101

Posted May 21, 2013 at 7:44 PM

“I still have to wonder if spinning off RAM is a prelude to shuttering Dodge.”

I wouldn’t worry about it. Marchionne is a fan of niches, and he wants to cover a bunch of them. He sees Dodge as the mainstream US brand, and Chrysler moving upward to some sort of near-luxury slot.

The current trend in automotive marketing is to build car brands around a common face, in addition to other design language. I believe that Marchionne was trying to avoid a repeat of the Dodge Caliber, i.e. an awkward looking car that aped the styling cues of a truck. By separating Ram from Dodge, he could make cars look like Dodges (whatever that means) and Rams look like trucks.

Personally, I think that wasn’t a great idea. Americans don’t care if cars and trucks from the same brand look different — Ford has established that, and the same can be said of Chevy. But it probably hasn’t done them much harm, either — the Ram 1500 is gaining on GM in terms of sales, and gets very positive reviews.

(I also think that the Chrysler plan is a bit weak. Near luxury doesn’t work anymore — think of Mercury, Oldsmobile or SAAB for some examples.)

Eric VanBuren

Posted May 21, 2013 at 8:52 PM

Geo separating the trucks from the cars isn’t going to affect CAFE for the better if anything it will make it harder for them in the long run. It’s Corperate AFE, so the brand doesn’t matter. Additionally trucks and cars have different standards that are tallied separately. That is why the PT Cruiser was a “truck”, to balance out the real trucks. GM of course did the same thing with their PT er I mean HHR.

If Chrysler dropped Dodge what would replace it? Chrysler-brand is a premium market vehicle, largely the LX cars, RAM trucks, there is no more Plymouth, and the Fiats currently the 500 is a niche economy product. So what would be ChryslerCorps bread and butter market? Or would they surrender it?

JFrank

Posted April 24, 2018 at 10:36 AM

Well, in 2018, it seems not to be the case, or at least it hasn’t happened – yet. The reason it works is that RAM is the truck line for FCA. No dilution of GMC/Chevy as at GM. Ford wins the pickup sales championship because it outsells GMC and Chevy, but not the 2 combined. If and when Dodge goes away, RAM can soldier on, alongside Jeep at your local FCA group dealer who sells the entire line, not just a brand or two.

I might have overstated that to a small extent. But did FoMoCo and ChryslerCorp. buyers ever care that their engines were all the same? GM may have used it to their advantage in helping build brand loyalty, but let’s face it, that was a marketing/branding issue in its own right. Maybe 90% of the buyers 🙂

Clonedspork

Posted May 21, 2013 at 12:52 PM

Didnt Roger Smith actually brag that he wanted to have to read the name on the car to find out what division it came from? He was alot of their problem.

ajla

Posted May 21, 2013 at 2:49 PM

“But did FoMoCo and ChryslerCorp. buyers ever care that their engines were all the same?”

I’m sure that if someone with a 351 Windsor told someone with a 351 Cobra Jet that their two engines “were all the same”, that the CJ owner would not appreciate that sentiment.

Even right now, I’d venture that many F-150 owners have a strong opinion on the 5.0 versus the Ecoboost.

Every domestic brand has engine superiority in-fighting, it’s just a bigger issue with GM because GM spent so much more effort to actively market it and brainwash people. If anything maybe they did too good a job. On me anyway…

Well, for a while, Ford did try to have different engines: In the late ’50s and early ’60s, they had the older Y-block, the FE series and the MEL engines, the latter not being shared with Ford Division at all. In 1958, for instance, the only Mercury that used a Ford engine was the price-leader Medalist, which had the 312; everything else had the MEL. Of course, that move ended up being ill-timed and probably cost Ford (as a whole) more than they got out of it, but they did try.

It was more than just power train branding but the total package. Every division had a unique appeal, a somewhat unique look, unique style and different colors and design elements. The platforms did spring from the same genesis, but the body on frame design allowed enough differentiation easily and inexpensively to make them unique. Monocoque bodies do not easily lend themselves to be altered as we saw with the FWD platforms in the 1980s. As time went on, both the domestics and the Europeans and Japanese gained experience with this design paradigm and learned to engineer them enough to be sufficiently different. Even though today many vehicle today, aka Infiniti, still brush dangerously close to look-alike vehicles. Although that may just be intentional or a lack of desire to spend the money to make them different.

As far as differentiation in general, look we have 260+ models on the market today. We have a half dozen major car makes competing in the US and worldwide and no one in the US in particular has a dominate market share. So it is almost like a free for all. Given that cars are a lot closer in size, features, and basic design today than 30 years ago, the makes have to get creative in other areas to appear different.

“All of this turned out to be a boon to Ford, which was better able to adapt a single main brand (plus a luxury brand), like Toyota and the Japanese.”

I’m assuming you’re speaking of recent developments with Ford, but I’m not convinced that the path they’re on currently is a good one. WRT to Lincoln Motor Company or whatever they’re trying to re-boot Lincoln as, it seems like a lot of artifice.

Ford spread so much of it’s money around in the 80’s and 90’s buying up companies and trying to keep all of them fed (with product and engineering) that now after the big sell off, there’s no money left to re-invent Lincoln, it’s oldest luxury marque. “One Ford” may be all we get.

I compare Ford’s stumbles with it’s products similar to the 80’s GM screw ups. They re-design cars but few are hits, and the old ones (Panthers, previous Focus) become instant classics because the buying public is put off by the new models, both here in NA and Europe. No one from Ford can describe an actual strategy for Lincoln, many plans are announced but we’re getting other Ford platforms rehashed for duty as Lincolns. Hello Mercury? (You must understand, I was a Mercury fan from a very young age. It was awful to watch it degrade into obsolescence…)

GM has made the commitment to Cadillac to give it unique models (some platform sharing, yes, but every other company does it) that are distinct from other GM lines. I have yet to see this from Ford with Lincoln. I have seen the new MKZ in the flesh… If this is the car that’s going to compete with the CTS or ATS, the ES or GS and others, Ford had better rethink their position or at least rename this thing the Montclair so when (if) the REAL Lincoln shows up, no one gets confused.

GM Ford and Chrysler both went buy-happy in the 1980s. GM bought a lot of non-car related business, Ford and Chrysler car related businesses. Most of those business achieved varying degrees of success, with Chrysler’s acquisition of AMC probably the best of them all. Otherwise most of them ended up typing up money that could have been better spent on product development. That is a problem not necessarily the purview of auto makers, but companies have gone down that road many times in the past. Both to try and broaden their profit pool, some just because they had the money, and others because they wanted some cache.

I think there’s an interesting story to be told here about the rise (and fall) of the factory option after the war. Before the war, there were lots and lots of accessories, but most of them were dealer options: spotlights, bumper guards, hood ornaments, radios, and the like. To the extent that the factory offered choices of equipment like dual horns or cigar lighters, they were often grouped into a couple of discrete trim levels.

After the war, automakers started adding stuff to the catalog to cash in; I recall seeing former Pontiac execs saying they realized that by loading up a de Luxe model, they could take a bite out of Oldsmobile or even Buick, as well as padding the profit margins. Add to that the rapid proliferation of features like automatic transmission and power steering/brakes and you got a situation where you could choose a strippo Buick or a loaded Chevy for comparable prices. By 1953, so many people financed their cars, often over longer periods, that it became easier for salespeople to push the extra options.

Then of course in the ’70s and ’80s the pendulum started swinging the other way, with the imports adopting “fully equipped” pricing policies to try to boost their perceived value and the domestic automakers belatedly realizing that having 15,000 variations of each product was a logistical nightmare.

I would argue that the dealer-installed accessory approach from the pre-50s was the most efficient way of managing easy to install options. Quality can suffer though and more of the profit goes to the dealer.

The advent of the stand-alone factory option kept more of the profit at the OE, prices down for the customer (less labor to install on line) and gave higher quality. The 15,000 or so permutations were not a problem in and of themselves (as few were actually built) but customers would get POed seeing a combo in a brochure not being able to find it on the dealer’s lot. Dealers would get POed having to dealer trade to get the blue one with roof rack option.

Ford pioneered the Rapid Spec approach which grouped high-margin features into discount packages. Stand alones at this point were rarely ordered and served mainly to justify a “regular price” for the value package on which to justify/claim a discount. This has lead to “fat features” at some companies, like heated seats in regions where they have limited utility or sunroofs just about everywhere.

Honda does a nice job keeping the factory model count down while offering plenty of Honda-designed and supplied accessories for the dealer to install per customer demand that day.

I don’t see options per se having anything to do with the demise of premium brands but I do see breakthrough features such as AT, PS, AC, PW and PDLs making the lesser brands all the car you would ever need. Modern smartphones have done the same thing to pocket cameras.

I know John DeLorean said when he was at Chevrolet, the proliferation of options really had become a mess from a logistical standpoint. By that point (1969-1971), the sheer number of option combinations at Chevy really had reached about 15,000. Add to that running changes and you have a real hassle from a parts and service standpoint (especially because the running changes weren’t necessarily reflected in the service manual), not to mention the issues you have when each car coming down the line is at least a little different from the ones ahead of and behind it.

DeLorean said there was also the problem that the production schedules didn’t necessarily jibe with the marketing and sales promotions. He described having various situations where the division was pushing some particular option or feature that then wasn’t readily available, which naturally left the dealers rather frustrated.

As a consumer, I think the tiered and packaged options approach is both good and bad. Aside from the quality concerns, I appreciated when I bought my current car that most of the features I considered must-haves (particularly ABS) were standard on the model I wanted, which saved me a lot of arguments. On the other hand, it’s frustrating when getting one feature you want requires taking another that you really don’t. For instance, I’ve had bad experiences with factory sunroofs and moonroofs, to the point that I told the salesman from whom I bought my car that I would not accept a car with the optional moonroof even if they gave it to me for free. That actually took the comparable Honda out of the running for me because the EX model I would have wanted included the moonroof.

Americans love individuality. That is part of the American DNA and that extends to virtually everything that is sold or used in the country.

Part of the reason that the Japanese especially did the value thing was that the currency exchange rate at times was so bad that they had to do something as not to appear overpriced. I have not studied the content of JDM vehicles over that same time frame to do an inter country comparison but I do believe the premise is valid.

The reason that the number of options declined in American cars was mainly due to cost. As with the switch to FWD vehicle platforms that demanded more time, capital, and resources that allowed for less changes, it became expensive to do as such. In addition, as time went on, cars became better and better equipped even on comfort and convenience items to the point that virtually all cars today are equipped with a/c, basic power accessories like windows, locks, and many other things. Cars are not so basic anymore and people are less apt to option out a car.

Imports used to be well equipped with many basic items but also, until about 20 years ago, also had a large amount of dealer accessories including a/c. Most of that was due to cost since most imports were truly imported and the factory could not make it cost effective to build to order.

Lastly, the way cars are bought and sold today has altered that as well. Years ago, more cars were paid for in cash, ordered, or financed for only a short time. Today, a lot of finance companies and many lease companies demand that cars be bought from existing stock. Also many dealers advertise specials and sometimes the manufacturers themselves, with the usual stipulation that the vehicles be in stock. Very few cars today are ordered and waited on from the factory. Thus, control of the content decision-making process has shifted from the customer to the dealer/manufacturer.

calibrick

Posted May 22, 2013 at 7:55 PM

Option complexity is a bit of a misnomer in that it exists as an issue mainly at the retail level. The parts are at the plant anyway whether they are set up as stand-alone options or trim grade standard. True more complexity means more coding work and the associated chance for error but this is a minor issue. Incremental wiring harnesses can be required at the plant but this too is a minor issue.

US car buyers haven’t factory-ordered cars in significant numbers for quite some time. The import structure of the 70 and 80s where premium features became trim grade standard was simply a more pleasant way to buy.

The domestics followed with packages, discounted or not, and trim grades separated more by features than trim pieces. Dealers pushed for this as it avoided customer frustration in not finding a brochure spec in stock and dealers having to dealer trade.

Customer frustration finds its way into quality studies and satisfaction ratings can dip if there is overly abundant choice. For OEs trying to improve their scores this is low hanging fruit and they are motivated to simplify.

Despite factory order guides dealers can deviate at some manufacturers and really screw up their stock if they don’t know what they were doing. Another reason to simplify.

Going trim standard or package standard is a pro/con discussion. Trim standard is less likely to be missed at auction (for residual value) and there is less sticker shock to the customer as he has to do the math to figure out he just paid $3,000 for navigation and parking assist.

Stand-alones will always have a role when new technology is being introduced. Today’s power seats and cruise control are items like navigation, parking assist and driver’s assist.

i would argue that at Tesla, right now, stand-alone options would make a ton of sense as everything is being built-to-order.

Eric VanBuren

Posted May 22, 2013 at 9:27 PM

A lot of the reason that the customer order option went away on US cars was the fact that the companies wanted to keep the lines producing cars despite the lack of orders. Chrysler’s sales bank was the most famous and of course led to rebates to move those unordered cars.

Pch101

Posted May 22, 2013 at 9:33 PM

Honda limits options for the sake of inventory management and quality control.

When options are limited, then there are fewer orphans on the lot. There are no pink Civics with whaleskin interiors but no air conditioning to worry about.

When there are fewer variations, there are fewer things that can go wrong. More combinations means more opportunities to screw up. Once you get the formula right, you can keep quality higher by reducing the variety of ways that you have to blow it.

calibrick

Posted May 22, 2013 at 10:25 PM

Not really. The best way to avoid a pink car stuck in inventory is to not offer pink (or any other low demand color). The second best way is to offer pink but only as build-to-order.

As for ordering the right model/option/color mix there are dealer order guides to follow but like I said more choice can lead to a bad order from a dealer (or a region or HQ), especially on an all-new product with no demand history.

Cutting the choice fat to the bone can lead to under-equipped or over-priced cars. It’s a balancing act.

For instance we looked at a 2013 Honda Odyssey the other day. Seven models to chose from now and there are eight colors available. Honda is offering more choice now than they ever have.

And poor inventory management practices damage the company. Not only are they a cash drain, but they lead to higher incentives which harms brands.

Sorry, but GM ought to take notes about Honda manages these things. It is definitely the other way around. Let’s not forget which one of them imploded in a massive bankruptcy that was so large that only the government could fix it. You need to learn from these mistakes, or else it’s going to happen again.

calibrick

Posted May 22, 2013 at 11:51 PM

I wasn’t making a point about how GM was or is managing their build complexity. My point was that Honda is adding more choice not less. And that hot cars sell without incentives because they are hot – one model or 15,000 doesn’t matter except in terms of customer satisfaction.

Slow selling models need incentives and if you are not careful with the choice there can be sales proof oddballs that require even more discounting.

I take that back about not making a point about GM doing it right or wrong. The Seville came fully-loaded with virtually no choice other than color.

It was a pioneer and great success in so many ways. Thanks for reminding me.

“Sloan’s structure made sense in the pre-war era, but it became irrelevant in the post-war era. Getting out of it was the problem….”

Paul, there’s some great analysis and comment here but you nailed it all quite succinctly. The ’55 Chevy and ’58 T-Bird can now be easily and rightfully seen as turning points, Ford had an easier time of it as they just built as their whims and the market dictated, regardless of how it would affect Mercury.

Chevrolet on the other hand has only been allowed to go that direction recently, and it’ll be interesting to see how far GM takes the division.

It wasn’t so much that the brands overlapped, but when the decision was made to develop all of these uni-body FWD models, the inherent characteristics of the design of a monocoque limits the designers ability to make changes. Back in the old body on frame days, you could simple alter the body and drop it on the frame. Thus platforms shared a common genesis, but were altered enough that the customer felt that they were indeed getting something different. Even if production qualities were absolutely first-rate on any of the 1980s GM cars, one would be hard pressed to be able to have made them any more unique than they were.

So you really had two problems at work, one being the assembly quality that suffered from different things but IMO mainly because so much change was introduced so fast that proper failure analysis was not able to be done. The problem is that it was so overwhelming that many simply did not know what to expect. Of course in those days, you really did not have computers like you did today to do simulation. Today if you have a wild idea you can essentially build it online and a computer program will run it through its paces so every failure point known or unknown is presented.

I’m sorry but distinguishing different brands on a unibody is not that hard and certainly not impossible. Take a look at the first Taurus, Sables, and FWD Continentals, there are almost no external parts that are the same on those 3 cars, heck they even stretched the wheelbase for the Lincoln in proper fashion for a more expensive vehicle.

At the bare minimum they could have at least developed a couple of different front fenders and hoods so they weren’t sticking a different grille in the exact same opening as their only differentiation. Or if they really wanted to, give different door skins to the Olds and Buick than the Poncho and Chevy just as they had with the Colonnades.

I don’t understand this point either… go back even way further than the Taurus – GM itself had no problem differentiating between compacts on the Y-Body platform in 1960, of which the same basic structure was shared with the Corvair. From the time unibody construction became commonplace until fairly recently, it was standard practice for (most) European manufacturers to offer coupe, sedan, convertible, etc. versions of the same model that were radically different looking from each other. Sure, they had a head start in perfecting these techniques… but if Fiat could do it in the 50s, I don’t see any reason why GM couldn’t 30 years later.

Eric VanBuren

Posted May 22, 2013 at 9:32 PM

Yes there are lots of examples of unibody platform mates getting very different looks. I picked the Taurble since the only parts visible from the exterior that were shared were the windshield, front door glass and door handles.

CARMINE

Posted May 23, 2013 at 12:24 AM

There are more differences to the GM 60’s compacts that “basic Corvair” structure, the Corvair was a unique vehicle, the belly pan was shared with the rope drive Tempest, which used a different body base on the Buick and Olds compact, and Buick & Olds shared the high end compact body shell.

During the development of the X J and A bodies, the differentiation you speak of would have cost additional money and time. The money could have been figured out if necessary but time was a major problem. So much was rushed during these years to meet introduction targets. Had we had known that gas was going to stabilize, the times would have been stretched and more could have been done to develop styling.

If you add up the first couple of years of volume of the X J and A cars, you are talking like about 8 million vehicles. That is probably more volume that the entire import volume combined prior. My point was that so much was going on it felt as though one was mobilizing for war. Normal patterns of product development were thrown out. Virtually nothing remained the same, neither the production process or the cars themselves. It should have been slowed down, a lot. But given the constraints of CAFE and corporate management’s desire to get ahead of the technology we did as much as we could as fast as we could. Think about it, look at the models that were introduced for the 1980, 1981 and 1982 model years. From the X J A F then the B&C were originally slated to be introduced in the fall of 1983. Seeing as all of those models represented about 2/3 of GM sales at the time and using a 50% market share figure that is more than 1/3 of all potential cars sold in the US were completely newly engineered and radically different in a very short time span. Then when gas prices began to fall again, and rather rapidly by the mid 1980s, big car sales took off and given the development costs of all of these FWD platforms, GM was making record profits off all of the old fashioned models.

One day I will dig through known resources that I have and come up with a pie chart of car development costs and resources over time. It will surprise many people. In 1960, most of the time and resources spent on a car was spent on styling and comfort and convenience (usually interior). By 1980, those factors were a MUCH smaller part as other factors began to come into play.

Most of those GM look a likes have more different parts than you would think, they crazy part is that GM did spend the money on different sheetmetal only to have the cars still look the same. The fenders on all the 1982 A-bodies are different for example.

That is a problem that is being dealt with now. Even to this day there are too many different parts for parts that are not really seen by the driver. Eventually there is going to be like 2 seat tracks for all vehicles.

GM was the largest automaker in the world. It had gobs of money to spend on product development and could obtain the best resources that money could buy if it wanted them.

Yet smaller companies with less money managed to make the move to FWD without any drama. I think that it’s time acknowledge that the problem was with GM and its inability and unwillingness to adapt to change, not with the technical challenge.

I go back to my point about lean. The new players in the game were better at making cars. Give some credit where it’s due; it has taken as long as it has for GM to regain some ground because of the general unwillingness to acknowledge that their methods just weren’t that great.

It saddens me to think about how GM vehicles dominated the scene as I grew up in the 70s and 80s. I still am obsessed with the wildly differing styles and choices they offered the consumer and cannot have enough of the old heaps in my driveway. Now, GM is just another Daewoo in my eyes thanks to . Regardless of how they compared to the imports (I could care less), I rooted for GM in my ignorance in vain because I loved what they built.

There’s a broken ’82 Citation 4H sitting in the backyard and I just so wish GM could have ironed out the kinks in those X-cars! The styling was fantastic, the color and option combos vast, space layout amazing, the TBI setup (2.5L) reliable, cheap, easy to work on, and the THM125 transmissions strong. These cars had the backbone to be great but instead they broke constantly.

As disappointed as I am over what GM hath flushed itself into, I imagine an ex-GMer must feel that much more so. This was very well-written but not an easy read for me due to the unhappy ending. Nice job Craig.

That was pretty much GM’s secret. Build quality, engineering, performance, they all counted to various degrees, but GM cars always looked distinctive and unique. You ALWAYS knew when a Cadillac was around it always stood out. Even today, my 83 Eldorado that I have been driving regular turns heads gets constant looks and garners attention. GM always had an emotional appeal to buyers which often was a critical factor in purchase. Today’s GM cars are probably the best they ever produced and some, like my 2008 CTS-V are among the finest on the planet but still my 83 Eldorado always gets noticed.

Craig, thanks for the very comprehensive article. With Paul’s addition re GM’s using its paying customers as beta-testers starting with the Corvair and continuing through the 1980’s A-body cars and Canucklehead’s point re dealer and manufacturing employee attitudes, I don’t think much more needs to be written.

I have no doubt many tongues were soured by the ups and downs of the Oldsmobile diesel engine, but funny thing it, it never really affected Oldsmobile’s total sales. Which continued quite briskly through the whole affairs and for some time afterwards. Only falling dramatically in the late 1980s when the cars began to change markedly and buyers turned elsewhere. The diesel was introduced in 1978, problems were pretty much known early on, yet sales remained brisk peaking in 1981 until the energy situation stabilized and the price of gasoline began to fall. The price of gasoline and the sales of diesels fell almost in identical linear fashion until the diesel was discontinued after MY1985.

Alternative fuel vehicles have no resurfaced recently until the price of gasoline has remained high and Americans have begun to realize that cheap gas is probably forever a thing of the past.

The American people really needed GM to be strong twice. The first time was when CAFE was introduced. Somebody should have stood up for market principles and been able to predict the cost to our economy in terms of lost jobs and consumers ruined by expensive and short-lived cars. GM let it happen because they didn’t want to appear to be strong. The second time was just recently, when CAFE was doubled by O****a. This time they let it happen because they’re weak. Thanks for nothing.

If this was O***a’s goal, he could have done far more through enabling domestic production than he has achieved thus far via his time bomb for the middle class. If you think CAFE has contributed anything to the goal, I invite you to look at our real fleet economy. Light trucks were 9.7% of our market in 1979. By 2001, they were 47%. Any benefits actually realized in spite of CAFE pushing every family into a light truck are linked to technology, particularly advancements in microprocessors and their contributions to understanding combustion events during design and managing them in use.

Some of that it true, but some of that is also some over generalization.

Yes truck based vehicles are now nearly half the market, but overall fuel economy of all vehicles is markedly better than it was 30 years ago. The fact of truck growth only affected the overall trend somewhat since the whole trend was up.

Interestingly regarding CAFE and long term trends in fuel economy. Between 1978 and 2011, fuel economy among domestic make models rose nearly 5 MPG, fuel economy among Japanese makes remained largely flat, while fuel economy among European makes decreased by 2 MPG. You can see that CAFE affected the domestics the most since they changed the most. The Europeans are a curious situation, mainly because there were more active brands selling cars in the US in the 1970s and most of those cars were small. Today, by volume, European brands are dominated by Mercedes and BMW, but WV and except in the case of a few WV models, are much larger today than 30 years ago.

With all that said, there is no question that our carbon footprint is much smaller today, per person and per car than 30 years ago.

Well according to Bob Lutz…Instead of CAFE The politicians SHOULD have Taxed Fuel….He points to the fact that as CAFE led to increased Fuel Efficency..People didn’t pocket this in Savings..Rather they Just drove more miles.
America probably does need to pay more for it’s fuel…Not popular thing to say, but necessary.

I agree with you 100%. Here in Soviet Cancukistan we’ve never had CAFE but we have had (relatively) high taxes on fuel. Quick comparison: most popular car in the USA is the Camry, in Canuckistan it is the Civic.

Here in British Columbia, we have the only carbon tax in North America, which is now 7.5 cents a litre. You should have heard to belly-aching that accompanied it. In fact, it is revenue neutral as families making less than $37,000 per year receive a rebate $115 per adult and $34.50 per child. This income threshold is also pro-rated, with the absolute cut-off being $60,000 per year. Thus, a low income family with no car actually benefits but of course, the nay-sayers don’t mention the tax credits.

We have now been through two elections and we still have a carbon tax and golly-gee, the world hasn’t ended. We also have a lower than average unemployment rate.

I agree with you on this. My answer to this goes beyond the scope of this website as it is both psychological and political. But yes I feel the same about CAFE. CAFE unfairly targeted the domestics because it artificially altered the rules of the game, making the domestics, especially GM, conform in a way that most of the European and Japanese did not. EPA and NTHSA regulations were common across the board so those pains were felt equally.

Had we not had CAFE, the market would have determined the popularity of a vehicle much as it has in Canada. CAFE has largely remained steady from 1985 until recently (except for trucks) and you can see how those trends played out. In the late 1980s, cars started to get bigger and consumer buying habits started to shift. American cars got larger again and SUVs became popular. Absolute fuel economy was no longer a top priority.

So what did the car makers do to respond to this, the domestics built a lot of SUVs and the European and Japanese cars began to grow in size and become more luxurious both in look and content. The Accord was no longer a flinty small compact car but grew to the point that, at least in the last MY, was considered a full sized car and quite plush.

It is interesting today that many Japanese cars are quite Broughamy (in today’s terms) compared to where they were 30 years ago.

I know this site stays away from politics, and that is generally a good thing. The elephant in this article though, is government meddling. It badly damaged GM, and the whole US automotive industry, and the economy as a whole, in fact the entire US way of life, by forcing unnecessary and rapid downsizing. I remember at the time CAFE was sold as a “must” because we would run out of oil by the year 2000. Instead, now we will be exporting oil by 2020…wrong again. For whatever reason, big government can’t restrain itself from social engineering…they must tell us all how to live and figure out ways to force us to do it their way. It seldom works out for the better. Government shouldn’t be banning or forcing us into Smart Cars…or big cars. WE should decide what we want to drive.

Thank you matt! It’s always nice to see that someone hasn’t forgotten that people who think they’re smarter than markets are always wrong. They don’t have the right, and we have a constitution that would protect us from their idiocy if it were abided by.

Great post, thanks for sharing. It’s refreshing to see the point of view of someone on the inside during those times, plus the perspective of someone in the engineering side, not management side of the business.

The automakers should have a design challenge where they throw out all regulations and rules and each design a vehicle that would entice people back into their brand. Imagine the possibilitys. While I doubt this would happen because of rules and regulations. Im sure there are others out there who would like to see cars or at least dream become reality. Like cars where built before OPEC or CAFE but with modern tech and amenities. And no I do not mean wild exotic concept cars. I mean cars for everyone and real world use.

He also mentions the Protected Japanese market..Allowing these companies to have a captive home base and guaranteed sales/ profits to advance..They weren’t hampered by legacy costs such as GM Pensions etc. And The Japanese Governmet kept the Yen low on purpose..Making these cars cheaper, than they would have otherwise been.
In effect that meant the Japanese had a $4,000 dollar advantage per car…So much for free trade.
He raidse some genuine points I fell. Not Just excuses.

There is a factor that I consider even more important that favors the Japanese. Almost everywhere else in the world, people buy small, efficient cars. Japan can make them by the boatload, and can sell them almost everywhere in the world. It is no big deal to meet a few additional emissions and safety regs and sell them in the USA too. When fuel is high, the Japanese get a very high return on very little investment.

American companies core competency is in big less efficient vehicles. Even in the best circumstances, there is a very limited export market for these cars and trucks. They too need to meet emissions and safety regs of different markets, but the payoff is miniscule.

This is why I am convinced that CAFE has hurt the US industry. It encourages the kinds of vehicles that are the specialty of other countries, and discourages the vehicles that are the specialty of the US.

The American strategy has been build to local markets. It arose prior to WWII, during a time when markets were highly protected.

The difference in tastes came early. The Ford Model A was a home run in the US, but a flop in Europe. Even at that time, this standard American car was too big, using too much fuel to be affordable to operate (early on, Europe cranked up the gas taxes in order to reduce consumption) and displacing too many cubic inches (engines were taxed by size.)

The local production strategy means, by definition, that you don’t export very much. You build regional cars to match regional demand. GM took it further by regionalizing the branding, too (Vauxhall, Opel, Holden.)

Lutz’s argument is a bunch of bunk. CAFE had nothing to do with the orientation toward local production — they were operating in this very same way decades before CAFE existed. If there was a market for GM in Japan, then it would have come from Opel, not from Chevrolet or the other American brands.

I certainly don’t buy Lutz’s protectionist arguments. As to CAFE, I guess my point was that CAFE did not require Japanese, Korean and the more economical European cars to re-engineer their fleet – their fleet was built for CAFE. The low-volume/expensive European cars could suck up the fines. It was the only US companies that had to reinvent their product lines.

Pch101

Posted May 21, 2013 at 1:24 PM

Detroit had small cars to build. GM took the Opel Kadett and turned it into the Chevy Chevette. The Dodge Omni was based on a Simca. AMC built modified Renaults in Kenosha.

The problem was that the cars just weren’t very good. Even the European designs, which were OPEC-friendly, weren’t very good, either.

Starting in the 70s, American consumers began to realize that Japanese cars (or at least certain ones) were better built than the American cars. What the OPEC crisis did was to wake up Americans to the fact that their own cars just weren’t very good. Toyota was far better at engineering and production than was anyone in Detroit. When it no longer became possible to use styling and cubic inches to hide inferior engineering, then the jig was up. The problem persisted because the Big 3 had too much pride to admit (and those who did know it, such as Roger Smith, didn’t have the leadership skills to do much about it.)

jpcavanaugh

Posted May 21, 2013 at 2:01 PM

PCH – I agree that the small cars were crap (or close to it). The problem was that the stuff most people were buying (Cutlasses, Caprices, LTDs, and Cordobas) WERE pretty good cars (OK, maybe not the Cordobas 🙂 ), and the GMs were surely among the best by the 70s. It was these (admittedly old-tech) cars that had to be deep-sixed.

CAFE replaced the Cadillac 425 with a 368, then finally that awful 4.1. No more Oldsmobile 350s in their Delta 88s and Cutlasses. No more TurboHydramatic 350s. The stuff that Detroit had perfected was gone. True, many of the decisions were made in an era of rising fuel prices. But when prices came back down, GM was prevented from bringing back the 350 in a Cutlass, even though they probably would have sold quite well through most of the 80s.

Perhaps the problem was that the old stuff had been designed back when GM was semi-functional. What we were getting by the 90s was the Northstar – not in the same league.

BTW, glad to see you. I see we get to pick up where we left off at TTAC. We disagreed on many things (like CAFE), but it is always a delight to deal with honest, thoughtful arguments.

Pch101

Posted May 21, 2013 at 2:13 PM

“the stuff most people were buying (Cutlasses, Caprices, LTDs, and Cordobas) WERE pretty good cars.”

I was afraid that was where you were going with this.

Pretty much everything that Detroit made was second-rate. All of it. But those failures were easier to see with smaller cars, since there was direct competition. In contrast, one can’t claim that the Japanese built a better Eldorado or make unfavorable direct comparisons, since there were no Japanese Eldorados.

Those who fail to recognize that Toyota and Honda made better cars, and that they did so because they were innovators with production methods, aren’t going to see this. But Toyota was an innovator that transformed automaking, and its ability to reduce the defect rate left Detroit in the dust.

(Roger Smith did see it, but he lacked the management talent to sell it internally to GM. So he tried to do an end-run by using Saturn, but that didn’t win many friends among the troops.)

jpcavanaugh

Posted May 21, 2013 at 2:32 PM

PCH – cannot disagree that most Detroit stuff was substandard by the 70s, particularly as a Mopar guy. The Japanese stuff was mostly superior, unless you lived in the rust belt, then it was 1957 Mopar all over again. But if we take, say, a 1978 Olds Delta 88 with a 350. They were not bad cars, and proved to be quite durable. And the Japanese were certainly not making anything like it. For a family in the days before the minivan, a Custom Cruiser or Caprice wagon was a pretty good choice.

These did stay around for awhile, but CAFE made sure that they were woefully underpowered with axle ratios best used coasting downhill. My 84 Olds 98 would have been pretty pleasant with a 350 or a 403. As it was, the tall geared 307 made it quite unpleasant at times.

86er

Posted May 21, 2013 at 2:35 PM

Second-rate to what?

cjiguy

Posted May 21, 2013 at 4:42 PM

To an extent I see what I think you are trying to say. Yes CAFE had positive implications to smaller (imported) automobiles because of the included regulations, but where was GM ever trying to truly make a competitive small car up until the obviously needed RIGHT now 80’s? If the Vega was closer in truth to the way the engineers wanted it, and not the fumbled mistake it came to be, we’d be talking about a higher performing, lower sitting, and properly-cooled four for the basic setup, plus the performance-oriented but also stillborn wankel. Much like a mentiond Camaro II I saw someone post recently in something ‘stang related. Not quite the roll it ended up filling thanks to CAFE, but alas. We now know the Vega was a badly contrived compromise In the end. This was followed by the H body cars, followed by X bodies… They fed the new GM customer base garbage for a decade plus and thought they would step up from that expensive mistake into an Oldsmobile Cutlass? Young buyers with money went everywhere else in the long run it seems…

geeber

Posted May 22, 2013 at 6:58 AM

There were no Toyota Eldorados or Caprices or Cutlass Supremes, but that doesn’t necessarily mean that if the Japanese had chosen to build one, it would have automatically been better than what GM was offering. One can’t really declare the Detroit offerings “second rate” when the competition is only hypothetical.

Note that the Tundra has failed to make a substantial dent in Silverado sales, despite substantial efforts by Toyota, and the Sequoia hasn’t exactly sent the big SUVs – Tahoe/Suburban/Yukon/Escalade – reeling.

But, unlike the 1970s and 1980s, Toyota hasn’t been attacking GM’s soft underbelly with those vehicles.

Pch101

Posted May 22, 2013 at 7:39 AM

“if the Japanese had chosen to build one, it would have automatically been better than what GM was offering.”

The engineering and assembly quality would have almost certainly been better, because TMC was a lean producer (and good at it) while GM wasn’t.

And when TMC decided to build a better Buick in the form of the Cressida and Avalon, it did. The Lexus LS was certainly a more credible competitor to the Germans than was anything from Lincoln. I don’t see how an Eldorado would have been a great exception.

“Note that the Tundra has failed to make a substantial dent in Silverado sales”

This discussion – or mine, anyway – has been about disparities in build quality and assembly processes during the 70s and 80s. The truck market is a lot more conservative, TMC hasn’t been in the full-size truck game for very long, and the domestics are producing much better vehicles now than they used to — these days, everyone is a lean producer at least to some degree — which gives those current buyers less reason to switch.

There is truth to that statement, and a lot of my argument in a nutshell. Sometimes s*it happens in life, world events take over, something gets invented or something else intervenes. Often it has an unintended detrimental effect on someone even if they did not in particular to cause it. GM was a lot like that. We can write a lot of mismanagement, apathy, rot, or whatever but the fact remains that GM was the master builder of the large stylish powerful car and when various various things happened like OPEC, CAFE, EPA, and other things, they were disproportionately affected. Yes a lot of things could have been done differently, but in the end I often wondered if it would have still ended up at the same point. Maybe GM would have still had 30-35% but given the constraints placed on it, it would have been damn near impossible to have maintained 50%. At least not in a truly free market economy. That is why today, even with superior vehicles, individual makes like Toyota will never be able to achieve such a domination of market share in the US or worldwide overall.

But the Japanese market isn’t really “protected”. There have never been import barriers of any kind in the modern era. The German brands have been very successful in Japan.

Japanese simply wouldn’t accept the perceived and actual quality deficits of American cars in the last three decades or so. Toyota agreed to sell the Chevy Cavalier as a Toyota Cavalier in Japan, specifically to help with the balance of trade, but it couldn’t be sold.

No, the Japanese market is protected through non-tariff barriers. The type approval process makes it difficult to get vehicles approved in a timely fashion or to compete on innovation.

There’s a reason why the EU automakers don’t want an FTA with Japan — because they’ll be the losers from the arrangement. The system is opaque to outsiders and they have difficulty negotiating it, even though it’s theoretically open to them. Tariffs aren’t the only way to keep products out.

But the Americans haven’t had much to sell to the Japanese that the Japanese would want. Yes, there are trade barriers, but it’s not as there is a massive market in Japan for F-150s or Impalas.

I lived and worked in Japan during all the hubub and the attempts the Americans made to sell cars in Japan were just a big, cynical joke. Japan taxes cars based on displacement and Ford responded with a 3.8 litre Taurus and GM with a 2.4 litre Cavalier. This is the real reason the Americas flopped so badly as the vast majority of cars sold in Japan are 1.5 litre or smaller. Of course, Detroit screamed bloody murder about Japan’s tax laws and the Japanese replied that Detroit should sell market specific models just like they did.

Really, if you were Japanese, would you go to your local Toyota dealership and buy a proven product that wouldn’t be taxed to high heaven or buy a Cavalier? Easy answer.

Paul is also correct; German cars have done very well, even the large displacement ones. Japanese want to buy them.

Pch101

Posted May 21, 2013 at 2:55 PM

“German cars have done very well”

They pretty much have no market share. They don’t really do very well at all.

At this point, Japan is a niche market for the Europeans. If they had high hopes for it, they would be clamoring for an FTA.

But it’s the opposite. The Europeans don’t see free trade as being any help to them at all because Japan’s non-trade barriers will still be there, while Europe will be free of its current 10% tariff. It is not easy for them to get through the Japanese system because they aren’t locals.

Taxes on displacement are the Japanese and European version of US CAFE. They are artificial means to control the market. Which shifts the decision making from the hands of the consumer to the hands of government.

It wasn’t so much that they were “woken up” to the Japanese, but once GM and the domestics stopped building decidedly unique vehicles, there simply was no other justification to buy GM in many regards. Consumers would put up to some degree varying build quality and such things if they absolutely loved their car. Why do you think people hang on to and collect odd European cars even though they take the patience of Job to keep them running? When GM cars started looking like Japanese cars the writing was on the wall.

Great article! I’m currently writing a 10 page paper (my HS senior paper) on why GM failed. I agree with your points. The massive switch to FWD everything was a big bet, and a bet that GM lost. If gas prices had stayed up, cars like the ’86 Eldorado recently posted might have been at least somewhat successful, but instead the opposite happened, and gas prices were lower than ever. Now, GM was caught with it’s pants down, with a bunch of small lookalike FWD cars, and only 2 big RWD cars, the outdated b-body brougham and caprice.

A funny thing is, if GM wasn’t so big, they wouldn’t have been able to afford to revamp every model line in every brand, and therefore would’ve had a nice mix of FWD and RWD cars by the mid 80s. They really were a victim of their own success.

Also, I think the vega was the first car from GM that showed the corporate culture was changing, and for the worse. Instead of letting the Chevy guys design, plan and engineer the car, GM corporate teams did all that, with Chevy effectively only selling and marketing it. The fighting that must have gone on between corporate guys and Chevy guys was a real precursor of things to come.

Very nicely done. A point I would add is the way GM drifted from its original form. The way GM had been set up was to mate autonomous divisions (which designed, built and sold cars and trucks) with centralized planning and administration. Worked like a charm into the 1960s.

As DeLorean’s book made clear, the GM Central Committee started usurping the job of the Divisions in the 60s, making more and more decisions (which should have been made at divisional level) subject to veto or revision higher up the chain where people were so far removed from the cars and trucks that their input was either useless or harmful.

By the 1970s, the die was pretty well set. The cars were built by the GM Assembly Division, which took over all of the old divisional assembly plants. The engine sizes were largely standardized to make ready for mix and match. The Vega was a product of GM Engineering, not of Chevrolet Engineering.

There is, floating around on the internet somewhere, a memo written to the GM brass by Elmer Johnson, an attorney who had become a GM VP. Johnson had seen some of the same things DeLorean saw, and tried to do something about them, but could not. His memo, written shortly before he resigned, is fascinating reading. As I recall, it basically called out a culture in which success was all but impossible. For example, managers were shuffled around so frequently that nobody ever got to oversee a significant project from start to finish. The goal became to stay invisible and not screw up in order to make it to the next promotion. The result was a bunch of managers who were lacking in any real experience.

Chrysler has proved to us that there are two ways to shed customers. First, you can build high quality but unappealing cars, as they did in the first half of the 50s. Second, you can build highly appealing but terrible quality cars, as they did later in the 50s. By the 80s, GM was, in my view, building cars that were largely unappealing and that were periodically of awful quality as well.

GM folks will probably not like the comparison, but Chrysler has been a much more successful company since the 60s, as bad as this sounds. Chrysler has been a roller coaster, but last I checked, its market share is roughly the same as it was in 1962 (a very bad year). GM’s results were much, much worse. GM’s best quality cars were surely better than Chrysler’s best quality cars, but its worst were worse than Chrysler’s worst. Also, on average, Chrysler’s cars have been much more appealing to customers over that entire time (or certainly from the 80s on).

A long, sustained failure is almost always the result of a flawed system. It is the flawed system that results in flawed products.

“For example, managers were shuffled around so frequently that nobody ever got to oversee a significant project from start to finish. The goal became to stay invisible and not screw up in order to make it to the next promotion. The result was a bunch of managers who were lacking in any real experience.”

And I used to complain to my colleagues that the Big 3 had gotten to the point that they developed their managers better than the developed their people …

Sadly, both your statement and mine are true at the same time, hence the results.

I do not know if that is really true. I for one spent 1/2 of my career at Oldsmobile, and the other 1/2 at Cadillac, mostly at my discretion. I did not move around positions all too often, even eventually holding an ME degree as well as an MBA. I even thought about getting a PhD but I grew older and realized that there was not point. People were either going to listen to me or not and no more paper would change that.

The short answer is GM failed to learn the lessons of the Vega and Corvair and let the bean counters overrule the engineers. As a result critical products with major technical challenges were released half-baked with with critical flaws due to either penny-pinching or lack of engineering time and resources. This was compounded by squandering the profits of the SUV boom instead of developing better products and burying Saturn in the divisional turf wars instead of doing something useful with it. At the core GM did not adapt effectively, unlike Ford and Chrysler who innovated successfully in the 80s with the Taurus and the minivan.

This.
The X-Car in concept was a dynamite product launched at the right time. If it had the engineering and refinement of the first-gen Accord, and was followed up with equally-good products in other categories in following years, GM could have dominated the car market as in their heyday.
Instead, despite spending a huge wad of money (marketing, unlike engineering, never seemed to suffer from penny-pinching or lack of attention), GM’s arrogant internal culture of cynicism and bean-counting fumbled product development near the goal-line with under-engineering and shoddy corner-cutting. They turned off a generation of younger buyers who were still receptive to GM products at the time but soon would not be, and fueled the rise of the Japanese brands to the top of the sales charts in mainstream family sedans where they remain today.

A lot of the half-baked part came in due to time constraints. CAFE regulations increased year to year and it forced a lot of last minute changes. The V864 program was entirely CAFE driven and was dropped not as much because of the problems but because they fuel economy targets were not met. The HT4100 was not intended to be introduced longitudinally, but it was to meet CAFE targets. The downsized cars were not ready yet so it was either engineer the HT4100 into the current cars or risk government action by failing CAFE. Given AT&Ts impending breakup at the time, the fear was real.

I will have to check but remember seeing comments that GM was no more affected by CAFE, OPEC or EPA than the rest of the OEs?? Clearly there was more pressure on them. More pressure means more mistakes.

Perhaps not THE root cause for the downfall but an important, contributing factor.

You often hear GM didn’t try hard enough or that they lost their way. In fact they tried too hard switching to FWD so aggressively and across the board. No one ever spent so much in so little time. As Craig said the change at GM from 1975 to 1985 was unprecedented.

Power shifted from individuals like Mitchell and groups like the Divisions and Styling to Finance and Manufacturing. That was a major cultural change at the company. Engineering and Manufacturing were responsible for getting the product out on time and Finance for getting it out on budget. Of course there were also targets for product competitiveness. The plan on paper certainly looked good.

Achieving on time, on budget and competitive is a tall task for any company let alone one with such enormous profit pressure and hungry, capable competitors all around. But you cannot say no to the targets and keep your job even if the task is unreasonable.

Instead you say yes and do the best you can. Failing at on time or on budget is career suicide because the mistake is apparent immediately. Therefore those targets are never missed. Instead the competitiveness (including design, performance and DQR) is compromised to whatever level necessary to meet the more immediate goals because a weak product won’t come back to haunt you until later. By that time product-side staff will have been moved around making it hard to pin blame on any one group or individual. Constant reorganization is another way to protect people from unreasonable objectives.

Chrysler under Iacocca was still managed by a Kings X and it worked as a stop gap. When he left power was in the hands of Gale, Castaing and Lutz, not Finance. That worked too.

Ford took the most interesting approach on the Taurus. Peterson was not just a car guy he was a smart guy and saw what happened at GM. Since the investment in Taurus would be enormous the expectations for volume and per unit profit had to be high. But the product also had to be great or Ford would be done.

They made that work by creating Team Taurus, a cross functional team empowered to actually say no. This approach prevented short shrifting of the product to meet the goals of Finance and getting it out on time. An effective way to manage a program but rarely seen in mature, large organizations before the mid-80s at Ford.

GM, while struggling, was a far healthier company in the late 70s than Ford or Chrysler and that was a contributing factor in how they decided to managed their business.

Success is always preferable, but experience in failure is better than no experience at all. That is why experienced individuals will always be more valuable than fresh people. Yes fresh people may have new ideas or be willing to change faster, but there is a way to bring those ideas into an organization balanced by someone that can make seasoned informed decisions based on experience.

It’s great to have Craig’s inside perspective, and I look forward to more from him.

GM in its prime was like Kafka’s Castle, everyone on the outside wondering what the heck they’re up to in that big, powerful, intimidating place. US manufacturers don’t loom so large anymore. Today the state-like corporate leviathans are finance and oil companies. There was a Gladwell story from the time of the bailout about how private equity guy Steve Rattner threw his weight around at GM, as the designated hatchet man for the feds. Can you imagine anyone doing that to ExxonMobil or Goldman?

Not to turn this into Investment Banking Classics, but Goldman actually was bailed out. If Goldman hadn’t been converted into a bank (which gave it access to the Fed window), then I have my doubts that Warren Buffett would have come riding in to the rescue with a bucketload of cash.

So much information, so many points to consider in a posting like this… I could spend hours re-reading this and commenting on many of the posts.

I mostly want to say, well done Craig! It’s important to hear these things from someone who lived through them. I was a youngster in the 1970’s, but very aware of the auto industry as I grew up near Lordstown, Ohio. Between the steel mills, raw materials, Lordstown and the transportation industries, there was never a dull moment. Many of the things mentioned in this post are as I remember them from the times, but of course some of these events are nearing 40 years ago now.

As a note to Paul: Maybe split something like this up in to smaller pieces? Craig covered a LOT of ground in this post. The commenting alone has been and continues to be fascinating reading. Just a thought.

For me one thing that perpetually, in the 80’s/90’s, showed that GM was failing to understand basic customer expectations was the turn signal and wiper control stalks on some of their cars, that when activating, at best, made an ugly click, and at worst a sickening crunch also given the slang term “breaking chicken legs”.

How such an essential driver control, made in house, could be crap for so long reveals a lot…

Many Ford products were just as bad in this regard though. The GM turn signal switch remained nearly unchanged from ’69 to the mid 90’s. The column mounted dimmer switch did not necessitate any changes to the turn signal switch itself.

I never liked the way it felt either so I “softened” the spring in my ex-g/f’s ’82 Cutlass years ago. That was a mistake because if the lever is not in the exact middle of its travel, power is cut from either the left or right brake light, depending upon where the stalk “lands”.

I think Craig’s fundamental proposition here is that the US market for cars after, say, 1974 was discontinuous with the market for cars before then. And the fact that a company was successful in the pre-74 market was in no way indicative that it would be successful post-74. The engineering, marketing, and manufacturing process requirements were substantially different between the eras.

Both GM’s massive front-drive program and its attempted diversification reflect that corporate management believed the fundamental proposition at the time. The future would belong to the Saab 99. Or data processing and signal transmission.

The US makers had, indeed, gone down a distinct path. I think that the objective differences between a 1955 GM sedan and a larger Peugeot, Mercedes, or Jaguar sedan of 1955 were smaller (and weighted toward GM), compared to the differences between GM’s cars and those cars in 1975. So there was much farther to go for the Big 3: foreign makers needed to scale up, but Detroit needed to reform.

But the way GM, and to some degree the other US makers, made these reforms transformed them from price-setters to players bound to compete hard on purchase price. For GM, there weren’t too many new or substantially improved engines in this era. And way too many GM cars looked like 1976 Sevilles, or aero-Sevilles, until about 1990, at least 5 years too long. The seating and instrument panels were often unpleasant. Somehow the GM reboot managed to retain negative trends of the earlier era. Not the elephantiasis, but the rubbermaid.

And so the time came when price was the main way the cars were sold, because consumers could find a preferred overall experience for maybe a 10-20% premium over the US car’s sticker price. Widening that gap was how sales were won. The exception to this was the truck/SUV market, which used to be like a miniature version of the pre-74 car market (limited regulation and temporary absence of gas price shocks). Do you think this worked so well because of different consumer expectations, lack of direct competition, or what?

Part of the current challenge is for GM and others in the USA is to continue to fulfill the market niche of “basic transportation.” But the other part is to innovate and lead consumer taste (what would a contemporary Iacocca want to sell, and how would a contemporary DeLorean make it go?).

Craig, this is a great write-up. I appreciate the inside perspective and was wondering when you’d get around to doing it. I have nothing to add to this that hasn’t already been discussed above or previously. But, I hope you’ll stick around and provide other stories from the inside of the giant. I would love to hear about some of the specific projects you might have been involved with, if you can think of things that might make for a good tale.

On cars and GM in particular, I can only offer my stories based on my experiences as a customer and as a former mechanic. Some of the best and worst cars I have owned or the family has owned came from GM. This shouldn’t be surprising considering the market share that GM enjoyed for much of my life. Still as a customer, I report my stories and my opinions as I see them, and let the pieces fall where they may. I don’t have a loyalty to a car company, really as I appreciate certain models from all of them (…well a lot of them). Loyalties to specific models and engines, is probably a better way to describe it.

But as an engineer, who doesn’t work in the car business, I can relate to having a personal stake in your product and your company. If a system that I design and build doesn’t function correctly, or a project doesn’t go as planned, I take it personal. It’s hard not to when you invest so much in something. Likewise, I want to work for a company that I believe in and will defend the decisions we made to those on the outside. I know that if I was in the car business, I would feel the same way. If I was part of the team that built the power window mechanism in a Cavalier, then you can be sure that I’d have one in the driveway. Much of what I do never becomes a physical system or a product that you can take home. For that reason, I envy those who actually got to work in the auto industry.

Of course all of the new cars that I have purchased have been GM and the cars I typically drove day to day, especially to work, were GM. With that said, I have owned about 50 or so cars in my life and not all of them GM. I have owned a handful of Ford/Chrysler product (including my 81 Imperial that I regularly plug), a handful of European cars, and exactly 1 Japanese make but the Eclipse was made in Illinois. With that said, Son #1 has the repair shop and takes in everything so I have seen everything over the last couple of years. So I have some vantage point to comment from a repair perspective.

Saturn Astra: GM’s Mazda 3, and might have been as successful if only it had been better marketed in the US.

Pontiac Grand Prix GXP: Sounds crazy, but this thing was crazy-good to drive for a W-body on steroids. Loved it to bits.

Any Holden-based GMer: the GTO, G8, and Caprice are real gems.

Having grown up in a GM household, I’m all for celebrating this company’s successes in recent years. And yet, given the expertise they’ve showcased in pieces, it seems like they could have done so much more with everything else…

I have a 2008 CTS-V. Its dark red metallic with the chrome rims. It drives like military jet aircraft and it does turn heads. Not as many as my old cars, but still it is a definite presence among cars. Given the V platform, it is the most capable yet most efficient Cadillac, and maybe any GM car ever. With that car I could legitimately bait all comers, at least 4 door comers from any Japanese or European brands and be confident that I could outrun them.

Car & Driver recently tested a CTS, BMW, and a Lexus and while each best the other in something, the Cadillac was universally acknowledged as having the best chassis they ever tested in a car that wasn’t a super exotic.

What belt required you to pull the engine? I know of no GM product that needed that or any car on the road for that matter. Except for maybe some obscure Ferrari or something. I have worked on many Citations and the 2.5 and 2.8 engines persisted for many years in many other products.

Have learned from this post and the comments. The discussion on the slow death of GM is kind of like watching the Titanic sink or the World Trade Center fall in slow motion. Unfortunately, I do believe our own government played as big a role in GM’s failure as anything. Wonder how things would be different if GM had been broken up around 1962 ala ATT.

AT&T was broken up in 1984 but the Supreme Court decision was handed down in 1982 but the lawsuit was filed 1974. Conglomerates were going out of fashion in the US by the early 1970s and GM was always under threat.

Glad to see such interesting analysis. To me the basic problem with Sloanism is that it was heavily based upon styling and marketing. Substantive engineering innovation didn’t matter a whole lot. Indeed, it got in the way of maximizing economies of scale.

This is the ultimate reason why the mid-50s merger of Studebaker-Packard and American Motors would have been a much quicker failure than George Romney’s gambit, which ran in the opposite direction from GM envy.

Romney instead anticipated the Toyota/Honda approach. He emphasized efficiency, economy and engineering innovations instead of styling, size and power. He also placed what for the time was an unusual emphasis on build quality. And while he did, to a certain degree, participate in the annual model change sweepstakes, he stuck with the same basic bodies for an unusually long time during an era where the Big Three threw huge sums of money into clean-sheet redesigns.

According to the common wisdom of the time, the late-50s/early-60s Rambler should have been a dismal failure. Instead it was the most successful independent American brand since the roaring-20s.

Automotive websites don’t often talk about the POLITICAL economy of the auto industry — and that leaves out a key issue. During the 1950s Congress debated with some regularity whether the Big Three — particularly GM — had become too big. Indeed, Romney proposed antitrust legislation that would have broken up an automaker once it reached a certain size.

I would argue that GM’s — and to a lesser but important extent — Ford’s dysfunctions of the 1960s onward would not have been “fatal” if the American industry had maintained at least six viable passenger-car makers through the 1970s. When that didn’t happen, as Romney predicted, Detroit became too fat and lazy to be competitive with the imports.

As a case in point, GM wouldn’t have waited nearly so long to master FWD technology — and thus had such a steep learning curve in the 1980s — if it had stronger domestic competition in the 1960s and 70s.

While I agree that Romney’s approach was prescient, I disagree on one point – I don’t remember him emphasizing engineering innovations that much during his tenure at AMC.

AMC was still using flathead sixes in the American through 1965, and vacuum windshield wipers as standard equipment on all lines through the early 1970s. The “standard” Ramblers and Ambassadors used the outdated torque tube drive arrangement through 1966, and the AMC continued using kingpins in the front suspension of the American and Javelin long after every other domestic car maker had abandoned them.

AMC was a very resource limited organization compared with GM or Ford, so it’s not surprising that they kept the old technology as long as they did. That is really the reason why Romney didn’t emphasize engineering as you’ve mentioned – they didn’t have the $$ to make major changes.

Romney did not have the resources to compete across the board and against the mainline GM models. AMC tried this a bit in the 1960s and it cost them dearly in the long run, effectively forcing them into a cycle of stop gap product engineering that ultimately led to their demise.

Geeber, AMC in the Mason-Romney era was hardly the American Citroen, but the company was a pioneer of unit construction, an advanced form of air conditioning, “fuselage” styling in the 1956-57s, and a sedan-wagon body style that was much less cumbersome than the typical wagons of the 1950s.

Let’s also not underestimate the innovativeness of the 1956 Rambler, which was arguably the most space efficient family car of the 1950s. Its basic dimensions — including an unusually upright seating position for the late-50s — anticipated the contemporary mid-sized Camry and Accord.

Note that Ramblers were often ahead of direct competition with regards to features such as three-speed automatics, dual-master cylinder brakes, headrests, and safety door handles.

I would agree that this is not terribly exciting stuff for the sporting lad, but these features added up to a meaningful alternative to low-end Big Three offerings.

FWD in the Toronado, Eldorado, and eventually Riviera was very different than in later FWDs and with most FWD applications as we know them. It would not have been cost effective for GM to have done what they did with those cars to small cars. Part of the reason why that technology was then given to the premium brands because they could be priced to recover the cost. FWD in those cars was sold less on total package efficiency but was considered a luxury touch. Like how it was on Cords in the 1930s.

Regarding copy-editing: I take responsibility for that. Craig left this as a comment (longest ever), and I couldn’t bear to see it down there at the end of another article. So I turned it into a post in great haste. Craig originally preferred that I wait until he had a chance to go over it more carefully, but I am a very impatient man! My bad. But it stands on its content.

I am generally satisfied with it. I said what I had to say. Typos and pure grammatical errors can be dealt with but I dislike changing things based on tone or implication. Stories need to reflect the mindset and competency of the author especially on an amateur site like this.

Great article – always interesting to hear from someone inside the corporation for the “real story”….

I believed the hype and bought a new 1982 Buick Skylark (X car) – 2.8 V6 with a 4 spd manual. I really thought this was going to be a great car; roomy, sporty, economical……

It was a nightmare; in the first year it was in the shop six different times – the transmission locked up, it sprang a gas leak in the engine compartment (fortunately caught before catching fire), the paint was full of orange peel, etc, etc.

I traded it a year later for a …….wait for it……..Olds Cutlass 5.7 Diesel………..

I probably should have added – the Cutlass diesel actually gave me few problems – as has been noted here, the bugs were worked out of the diesel by ’81. It was just horribly slow – we nicknamed it the “Gutless”,,,,,

Virtually all diesel products that I have driven that were not turbo charged were slow. I have driven a couple of Mercedes 200 & 240D and they were so slow they could make you cry. I am not sure how Mercedes was able to getting away with selling those vehicles for such a premium. The performance was awful and they suffered from many of the common diesel ills. Now the turbo diesel Mercedes were much better almost civilized.

Back then, raw performance wasn’t a major complaint with diesels, as it might be today. Remember then, once performance cars died, most cars got a lot slower than they had been, so for most people, the Oldsmobile diesel was not really that worse off.

for one, it’s the complete lack of brand management. just look at Opel – nobody on earth could tell you what Opel is about. and in our times, with all cars being “good” to a certain level, it really is the brand that sells. proof that GM is the WORST at brand management is Saab. they even managed to f**k this up, a brand that was loaded with promises and an unreal perception of veryloyal customers… all gone within15 years. I really wonder what Ferdinand Piech would have been able to do with Saab!

second reason is – and one that goes hand in hand with the first – the failure to build cars that are desireable. not just appliances to be discarded when used up, but things that makethe customer feel special, maybe happy. i mean, everybody knows what you get when you buy Italian … problems. but then again, an Alfa Romeo still is an Alfa Romeo. Look at the cars they built in recent years: the 156, 147, 166 and 159, the GT and the Brera or the new Giulietta … all of them not really up to scratch in face of the competition and probably as unreliable as their reputation.but boy, what beautiful cars. desireable. to the extent that makes you forget their imperfections. and that’s how you do it … at least if you’re not Toyota, I guess.

I disagree with your second point. Many people say that they want a car that is “special”, but what they ultimately buy is an appliance-like vehicle that gets them from point-A to point-B comfortably and reliably. A mainstream auto manufacturer can’t make a business case around building niche vehicles.

One of Graig’s points was that GM used to be able to make even their low-end bread-and-butter family sedans look “special”, both due to their RWD-BOF layout and the percentage of design budget that could be put towards bodywork. When they went FWD-unibody, they couldn’t do that anymore, so their cars all started to look and feel the same. Suddenly having myriad brands selling effectively the same car made them redundant, but GM couldn’t (easily) shutter any brands, so they had to badge-engineer the same car to provide something for each dealer channel.

Compounding the problem, the attitude at GM was that small cars, and low-end cars in general, were starter vehicles and that consumers should move up the brand ladder to larger, more opulent cars as they became more affluent. With that attitude permeating the organization, there was no incentive to make low-end vehicles attractive to the customer.

That the consumer WANTED to move-up to a larger, more expensive car was the fundamental tenet of the Sloan brand hierarchy. When they were “the only game in town”, this was easy to get away with. We can argue that this system was already failing slowly after WW2 for several reasons. However a big nail in its coffin was GM being unable to differentiate the styling of expensive versus cheap cars.

As Dr.Lemming said above, “To me the basic problem with Sloanism is that it was heavily based upon styling and marketing. Substantive engineering innovation didn’t matter a whole lot. Indeed, it got in the way of maximizing economies of scale.”

That was the secret of Detroit and GM in general. A lot of people kept buying Detroit cars, even after bad experiences, because for a while, the cars kept on being special.

At Oldsmobile, the whole diesel experience seems to had been almost a forgotten even by the time the plug was pulled in December of 1984. As late as two years later, MY1986, Oldsmobile was selling a million units. Diesels came out in MY1978. It took 8 model years for sales to drop off drastically. A lot of people naturally tie the diesel experience in with Oldsmobile’s decline. It is hard to accurately quantify its effect, but diesel problems were already well known by 1981, yet diesel sales peaked that year. People continued to buy diesels because they wanted Oldsmobiles, big stylish comfortable yet inexpensive Oldsmobiles and at least while energy was uncertain fear drove sales. When gasoline prices began to settle down and energy was more certain, so did diesel sales, almost irrespective of the reliability of the diesel.

So while diesel sales fell to nearly nothing by MY1985, Oldsmobile sales continued to go up peaking in MY1985 and nearly matching that for MY1986. Suddenly, buyers didn’t wake up in the late 1980s and say, gee I think we need to take our business elsewhere because we bought a diesel Cutlass in 1981 and it gave us trouble. No what happened was that owners of traditional cars that were still being produced reached the point of trade in, did not like what was being offered, and moved on. Sales fell accordingly. It is very likely that had Oldsmobile continued to produce the RWD models, even without change, and despite risking being excoriated by some of the press for selling “old” car designs, sales likely would not have fallen so dramatically.

The fact is, the 1988 Cutlass Supreme, in and of itself, was not a bad car. But it wasn’t an Oldsmobile, or at least the kind of Oldsmobile that buyers came to Oldsmobile dealers expecting to buy. As Coke found out, sometimes old habits die hard. You don’t mess with success. Oldsmobile was incredibly successful as late as MY1986 because people liked what they were offering. Then it was gone, and so were the customers.

Same goes for the Vega, people knew about the Vega issues, but Vega sales never really petered out until the Vega was already at the end of its natural 5-6 year product cycle. Chevrolet kept selling more and more Vegas, peaking in 1973 or 1974, thre millionth Vega was made in 1973, just a couple of years into production

geeber

Posted May 22, 2013 at 9:50 AM

Chevrolet did sell a lot of Vegas. But how many of those Vega owners replaced it with a Toyota, Datsun or Honda instead of another GM car? That is the key question.

Also note that there wasn’t the internet in the 1970s, and the annual Consumer Reports reliability survey wasn’t plastered all over the newspapers when it was published, so word-of-mouth regarding unreliable vehicles traveled at a much slower rate than it does today.

For the life of me, that’s exactly why I keep on buying Impalas I guess!

Something in my innards still regard them as “special”, whether true or not, most likely due to my heritage of learning to drive in dad’s beautiful 1960, driving his gorgeous 1966, me owning my awesome avatar, my great 2004 and my 2012 powerhouse.

This was an interesting article, and I appreciate Craig’s willingness to share his views and experiences with us.

The article places too much emphasis on CAFE. The fuel shortages of late 1973 and early 1979 were the important events, not CAFE. They heightened customer concerns over fuel economy, and encouraged them to try out Japanese cars. Those two things would have happened without the federal government enacting CAFE.

It’s also important to note that sales of imported cars and small cars in general had been increasing before 1973. They had grown enough that GM and Ford felt the need to roll out the Vega and Pinto, respectively, in the fall of 1970 – or three years before the Arab Oil Embargo. The growth in the sales of intermediate-size cars was another indication that people were getting tired of the bulk and economy of full-size cars. Read road tests during 1970-72 – reviewers were already mentioning concerns regarding fuel economy and operating costs of various vehicles. Note that inflation was also a concern in the early 1970s.

This sentence says a lot about the GM “mindset” that led to its downfall:

Before OPEC, no one really cared about imported vehicles except on the margins. Mercedes was chipping away at luxury sales but unless they started building mass market vehicles, they would have been confined to a small section of that market.

Looking at the sales of Mercedes misses an important point – Mercedes was attracting customers who were truly rich, and generally younger and better educated than the typical Cadillac owner. As Paul has noted in his article on Cadillac’s fall, the division moved increasingly downmarket in the 1950s, 1960s and 1970s, chasing volume but at the expense of its former prestige image. By the mid-1970s Mercedes was more desirable than a Cadillac, and considered to be the “top of the heap.”

CAFE did kill off the standard-size car, and, thanks to the way it was written, allowed the light truck to take its place. But even if CAFE had never been enacted into law, GM still would have found itself in serious trouble by the early 2000s. It still would have been too reliant on vehicles that faced no real foreign competition – but instead of bearing names like Silverado, Tahoe and Trailblazer, they would have been called Caprice Classic, Cutlass Supreme and Fleetwood Brougham. The ultimate outcome for GM, however, would still have been the same.

Some of this I agree, some not. Who knows if GM would have been in trouble by 2000 without CAFE. OPEC was the ultimate change factor of course, but what CAFE did was alter the rules and those rules changed for the domestics and especially GM the most. The Japanese brands and by and large the European brands did not really have to do anything to be CAFE compliant. They did not sell anything that wasn’t. So when the government enacts a regulation that does not affect you, well you generally don’t change anything.

Without CAFE, Mercedes would have continued to have been a nuisance to Cadillac but Mercedes did not build anything that directly competed with any of the other brands. At that time Japan built nothing of any significant size and the other European models like WV were quite small. So the broad middle was open to the domestics and likely would have continued to be unless the imports started building cars to fit that market. As I said in my piece, without no CAFE, GM would have continued to build as many cars as large as they could as long as the market would bear. The imports, if they wanted to break into the volume game would have been forced to build cars more similar to GM and they likely would have been a lot larger and more Broughamy than they were. Its funny because especially the Japanese cars ARE a lot larger AND more Broughamy than they were 30 years ago.

The saying was, what’s good for GM is good for America, I find that to ring true, during good times and bad times. We really can’t point our fingers at GM’s downward spiral and criticize them without looking in the mirror and seeing America in the reflection.

For my 2 cents worth. I understand Honda and Toyota were better positioned for this “metamorphasis” which you explain in detail. One can almost understand the hurdles placed in front of GM once the die was set so to speak.

But this does not take into account the glaring discrepancy in quality between American and Japanese produced vehicles during the time frame in question.

I purchased a new 1981 Citation X11 with the High Output 2.8 litre engine equipped with the functional (sort of) Cowl Induction Hood, the tried and true Saginaw 4 speed, 5 spoke alloy wheels, hatchback with the rear spoiler. I was amazed at the way this car handled when new, and even more impressed with the true Hi-po engine which had a exhilarating torque curve to say the least. I bring these details into the conversation because this car was light years ahead of the Vega in drag known as the Monza. Quite honestly IMO this is the car that started the pocket rocket craze, being followed shortly thereafter by the Volkswagon GTI along with others.

This car promised so much…but was an unmitigated disaster once driven off of the lot. To this day, this was the biggest POS I have ever owned. So many of the problems were due to the workmanship, quality of materials, and just flat out poor design/engineering.

GM, regardless the upper management decisions was allowing pure garbage to be sold in the US. Wherein this car looked great on paper and on the showroom floor, the culture at GM had turned into “who gives a ch!t” just roll ’em out the door. One x-body piece of crap after yet another. The list of cars that were released to the public before they were ready is long indeed.

All the while Honda and Toyota were producing relatively cheap, fun, stylish, fuel efficient cars that had bullet proof reliability built in.

This IMO is where GM lost its way. I have raised 3 young men, 2 of which will probably never be seen in a GM product. Luckily my youngest isn’t old enough to remember the sins of GM throughout the 80’s, but this is the damage GM has to live with. I read daily about the huge strides GM has made in quality narrowing the gap to the point there seemingly now is no gap. I also read about the woes at Toyota with recall after recall. This news seems to have no effect to the generation of kids running around in Civic’s, Preludes, 250IS’s, Supra’s and the like.

Yes, GM lost an entire generation IMO, and they will struggle to get them back.

I am 50 years old and buy only American, a virtue which is lost amongst the younger generation.

I do apologize for the lack of participation by me with my own article. That was because I wrote the article, as a comment, entirely on the fly Monday evening. Paul liked it, contacted me and wanted to run it immediately. I agreed and it went up Tuesday morning, aside from the added pictures, mostly entirely as I wrote it free form. I guess like many singer-songwriters, when the inspiration hits, things just flow…

Well Tuesday was an exceptionally packed and busy day and I did not get home until after 10 PM thus having little time to get online. As I write this, I have not had the time to even read any of the comments, but I will today and make replies accordingly.

I am sure it was not lost on astute readers of this site my background and knowledge base, but I felt that, despite the controversies of the time, it would be both interesting and beneficial to hear about some of the observations and feelings that were prevalent during much of that time in Detroit and at GM specifically. The automotive industry is a completely different place today than it was even 30 years. Some of it due to the fact that Detroit no longer accounts for most car sales, some of it due to those tubes we call the internet, some of it due just to the passage of time.

So while it has been interesting reading about people’s feelings and experiences about different cars on a personal level, it has also been personally interesting for me to compare current and past observations with my own experiences from within. Some, if not a majority of the comments are generally close to events as they happened, some are not so.

I will continue to contribute, as a commentator and as a publisher, maybe not so many articles as deep and lengthy as this, but likely from a similar retrospective viewpoint.

“Before OPEC, no one really cared about imported vehicles except on the margins..”

This is one of many attitudes that led to downward spiral. Ignoring imports as if only ‘weirdo’ drive them. VW Beetle/Toyota/Datsun sales were up and up in the late 60’s, and GM assumed that ‘When they grow up, they will buy full size cars’. They made Vega poorly with that line of thinking, too.

Also, lots of blame shifting and finger pointing in the article. “If only GM didnt switch to FWD” etc. More like GM should have made better products and not assume people would keep “trading in when they got a lemon”

> This is one of many attitudes that led to downward spiral. Ignoring imports as if only ‘weirdo’ drive them.

That line of thinking had worked well for the Big-3 in the past, when their primary “fringe competitors” were smaller domestic companies like Studebaker and Nash, and later AMC. These subsisted mostly on compact cars and niche-market vehicles such as Jeeps. GM couldn’t be bothered to compete head-on in those segments because they were relatively small markets then, and there wasn’t as much profit margin in them.

Most imports in the early 1970s were very much niche vehicles styled and priced accordingly. Until those makers broadened their base and built more meat and potatoes vehicles they would have remained in those niche markets.

Craig, well done. It’s something I will need to revisit a few more times to take in the true scope of the story, the biggest corporation in the world deserves no less then the article you wrote. Just a few random thoughts.

I suppose it is no coincidence that the EMD Locomotive group was suffering from the same malaise of it’s master. In the early to mid eighties they lost market share to rival GE, who never looked back to this very day. Their SD50 series locomotive almost sunk the company and was ground zero for losing dominance.

“All Corvettes Are Red”, an insider’s point of view by James Shefter gave a good accounting of Chuck Jordan. He was a driven man, nicknamed the Chrome Cobra for his dashing good looks and sharp bite. The book played a sympathetic role to Corvette designer John Cafaro, who clashed often with Jordan. Looking back on how things played out, the C5 Corvette was a success, in part thanks to the hard driving Jordan.

There was a time in this country when an announced automotive recall was a BIG deal. Nowadays, they seem to be an afterthought to be announced after the latest human interest story played out in the evening news. But back then, recalls of engine fires or rear axles falling out were borderline scandalous. And in the 80’s GM as well as Chrysler seemed to have had many recalls. That had to have had great influence on the American car buyer.

Another turn off to the average American car buyer was the feeling that they were financing the Research and Development Department of GM. How could they not with the abysmal operating record of the Vega’s sleeveless aluminum bore, the Citation rear axles falling out, the Pontiac Fiero 4 cylinder engine fires, the Oldsmobile passenger V8 Diesel engine, the rusted bodies and frames, the plastic interiors. I believe many folks thought that “their” GM cashed it all in after 1972. From these incidents and rumors a lot of folks vowed they would never buy GM again. And so, here we are today, a once great company a mere shell of what it once was.

I’m a GM fan, always was and always will be. I believe Roger Smith and his ilk to be the chief architects of the downfall of GM. It should have played out another way, but for the love of more money, they fell and fell hard. In many ways they mirror the path our country is on. True leaders nowhere to be found and the money boys and bean counters in charge….

First of all – Craig, that was absolutely fascinating and insightful… well-written, too. There’s so much compelling information here and even though I haven’t commented on this thread until now, you (and everyone’s follow-up comments) have kept my brain working O/T the last couple of days digesting it all. This is really top-notch stuff in every regard.

I could not agree more that CAFE was, and continues to be, a misguided, ineffective disaster that should be seriously re-imagined or scrapped entirely moving forward… but this situation looks very different to me from the outside, and I think a lot of the sentiment you (and others) have expressed illustrates why GM failed and why so many of their loyal customers turned their backs.

This quote from JPC sums up the situation perfectly:

CAFE replaced the Cadillac 425 with a 368, then finally that awful 4.1. No more Oldsmobile 350s in their Delta 88s and Cutlasses. No more TurboHydramatic 350s. The stuff that Detroit had perfected was gone. True, many of the decisions were made in an era of rising fuel prices. But when prices came back down, GM was prevented from bringing back the 350 in a Cutlass, even though they probably would have sold quite well through most of the 80s.

CAFE did not replace Cadillac’s big block engines with the awful HT4100, General Motors did. CAFE is something that happened to General Motors and their several decades worth of flawed reactions to it is what caused them to fail. The fact that GM built their business on big, stylish, powerful cars many years prior to OPEC only works as an excuse for so many years worth of failure. As you stated, the move to smaller, FWD cars began in earnest in 1975 – but even before then came the Vega and before that the Corvair/Tempest… nevermind all the small-ish cars their European divisions were developing all the while, dating back to before Honda or Toyota had even built their first automobiles. But lets forget all of that anyway; I would say that GM still could have (unquestionably) turned things around until the year 2000. They were selling tons of light trucks at that point and making a larger profit on each one than they did for any passenger car. CAFE, by then, had turned around and shifted the market right into GM’s sweet spot. Here, all of the imports were at a distinct disadvantage. These vehicles were not, historically, their forte and they also faced a 25% tax on anything built outside the US. Just Ford and Mopar to worry about in this segment, and really only one of the two amongst them. For all the failures of the prior decade, they came into the 90s with a net profit of ~$24.5 billion earned between 1980-1990… and then the SUV boom happened. How was all that money wasted? How were they still building woefully uncompetitive passenger cars at that point?

1975-2000 – that’s 25 years. Twenty-five! How many product cycles is that, and for how many different cars?! They were the home team. They had the advantage and the market share to prove it. CAFE was undoubtedly most detrimental to GM, but it was hardly a fatal wound. They still sold more cars than any other corporation on the planet every year of their existence until 2007. There was plenty of time to adjust, plenty of ways to make it work. To get to the point they ended up at takes an unprecedented amount of bad decisions and bad cars, and I’m being generous with the timeline here.

I also can’t believe that GM was ever legitimately in danger of being broken up from 1980-onwards. Federal “voluntary” import restrictions were imposed on the Japanese manufacturers starting in 1981, with the rationale being that Detroit needed time to play catch up on fuel-efficient, CAFE compliant vehicles. Even though this was originally designed to benefit Ford and Chrysler, the same government that negotiated those restrictions was not going to risk harming the nation’s largest auto manufacturer in any way.

That’s the way I see it at least… and I could go on, but I don’t think there’s any point. If I had to pick the one thing that damaged GM more than any other single factor it would be their unwillingness to build a decent small car. It wasn’t that they weren’t capable of building decent, unibody, FWD cars – I see the C/H-body cars as extremely good vehicles in terms of both quality and driving dynamics – or that they were incapable of building cars that were both attractive and small… but they did their damndest at every step to make sure those two elements never combined in one single product. That’s where they lost to the competition and it seems to come from some crazy misconception that those cars don’t matter; a position that was never re-thought until it was way too late. In the post-bailout era I guess it’s once again “wait and see” – personally I like the Cruze and Sonic a lot, but it’s still early for them.

I hope they do well and I honestly mean that. I’m sure some people are going to read this and say “that guy has a BIAS against GM!” but that is a load of bullshit. I’ve never had any brand loyalty and I have no dog in this fight since I’ve never bought a new car and don’t plan on it any time soon. I have owned several GM cars and if I was in the market for a new car, there are many GM products I’d buy – yet no Toyotas or Hondas. Not any that are currently available, anyway…

GM was clearly affected by CAFE more than any other manufacturer. All you have to do is look at each manufacturer’s CAFE figures at the time the legislation was enacted and you could clearly see that. Most import makes automatically complied because they only sold small cars thus basically had to do nothing. Some manufacturers, mostly premium European brands, chose to simply pay the fines over the years instead of altering their existing product or introducing smaller models to smooth out the figures. GM, to a lesser extent Ford, could not realistically flaunt CAFE without the expectation of severe action by Washington. To this day, GM has never paid a dime in CAFE-related fines.

Lets play devil’s advocate here for a moment. Toyota currently has a 45% market share in Japan. The Japanese automotive market is very similar to where it was in the US during the late 1970s. Toyota, Honda, and Nissan control about the same market as the Big 3 did. Currently, Japan has taxation laws on displacement and gasoline encouraging small efficient cars. Of course Japan is a densely populated place but that is a factor that cannot be easily changed. So imagine what would happen if the laws on taxation on displacement were suddenly lifted, gasoline prices suddenly dropped to historic lows about that time, and non Japanese manufacturers began flooding the market with larger vehicles. Physical constraints might stifle sales to some degree so it would not be a perfect comparison, but it would send the home market companies into a tizzy having to compete with all of these big vehicles suddenly in the marketplace that people now have no constraints to buy. Then say if Toyota took all the profits that it had and decided to bet the farm and start building massive amounts of beastly vehicles to get ahead of the situation. And they had to do it in 5 models years. Then after 3-4 years in, a change of government in Tokyo decides to reimpose gasoline taxes causing buyers to scramble towards smaller cars again. (I throw that in there to simulate the reverse that the rapid decline in gas prices had in the market in the US in the 80s).

How do you think all of that would play out? That is about the perfect reverse situation that GM was in during the late 1970s and early 1980s.

There was demand for small cars. There were gas lines, shortages and odd-even rationing, and a considerable number of consumers were desperate to save fuel.

The way to comply with CAFE was to sell a lot of small cars. The largest automaker in the world with the highest US market share should have had an easy time of this, but for the fact that the cars weren’t any good.

GM had plenty of resources to throw at it. They even had operations in Europe, which were already making small cars with small engines for local audiences. But the fact that even the European designs such as the Kadett/ Chevette were second-rate tells you something about the company as a whole.

Companies such as Toyota were pipsqueaks in comparison. They could have been shoved back into the ocean if GM had been capable. But GM squandered its resources and did a poor job of it. Don’t blame the government for that — that goes entirely to the hubris of an organization that couldn’t muster its resources and deal with a changing environment for improved reliability and the supply of oil.

The defense of GM is a bit like Goliath complaining about his defeat by David. There was really no excuse for it. It sounds good to the supporters who remain, but the majority of the former customers voted with their feet.

Which is exactly why CAFE put GM in such a bad place. Sure when gas prices were relatively high/recently spiked Americans bought small fuel efficient cars but as soon as prices stabilized they switched back to larger vehicles and who did they turn too for those V8 powered cars? GM. Sure those 77 and 78 figures included the downsized Full and in 78 midsize vehicles but they were still behind the 8 ball as far as CAFE was concerned.

Lotta insight and perspective here, very well written. My inclination is to believe that if the Vega, X, J and A lines had been well-executed, the American automotive landscape would look a lot different today. But that said, I’m hopeful for the company given what they’re offering today, even the Chevy Cruze offers interior appointments once unthinkable in a small car sporting a bowtie.

It’s taken the Koreans and Europeans to get them there with small- and medium-sized cars, but the future does look bright indeed for GM. It’ll just be a matter of leveraging their expertise in those markets, with GM’s traditional domestic (and Aussie) large-car and truck leadership to get them back, or near, on top. One thing’s for sure, it’ll be interesting to watch it play out.

The biggest asset that GM always had, and still does IMO, was the ability to build a good looking car and something interesting and exciting. That is one thing that the Japanese and other Asian manufacturers either never understood or dismissed about the American buyer. In many parts of the world, in dense populated areas like Japan, or in parts of the world not as economically advanced, the car (in general) has always been viewed as almost strictly a utilitarian device. Not necessarily something that provides a whole lot of personal enjoyment beyond the general freedom that it brings to allow you to get from point A to point B quickly.

The Europeans have had it to some degree with some cars. That is why European cars have always had unique (and somewhat dubious at times) styling since they too have somewhat of an emotional appeal. Unlike the US where taxation has generally been low on cars and space more available, European cars have generally had smaller engines to go along with their smaller sizes, but none the less many exciting and unique models have been offered over the years. Much like the US, many European makes have emphasized the personalities and features of their cars, often to the detriment of cost, reliability, and serviceability. Even among the worst US models, servicing them (however frequent) is usually easier and less costly than European cars. Some of the more exotic (say Maserati) European brands can be very interesting but have the most horrendous cost of ownership especially in the long term. There is a reason why the VW Beetle (first one) sold well all the way until the 1970s even though it was horribly outdated, primitive, and had unusual features (windshield washer activated by tire pressure?) because it was cool, simple to work on, and different enough that buyers loved it despite.

That is why at car shows, you see lots of domestics, a fair amount of Europeans and almost no Asians. Why? Well Asian cars are acknowledged to be well built but are generally purchased and driven almost strictly for their utilitarian value usually by people who do not value any personal experience in a car other than getting them where they need to go with minimal fuss or regard. Fortunately, they are only one segment of the buying population. So there will always be a market for cars that emphasis additional virtues such as styling, performance, prestige, or unique characteristics that draw specific buyers. No longer will any car market likely dominate independently but it is a healthy sign that we have a vibrant marketplace of domestic, Asian, and European makers that offer 260+ models currently that satisfy all needs and wants.

That’s also the reason no one has ever written a song about a Toyota; or ever will write one. For all the “Toyota is perfect, GM stinks” business that people like to throw around, there’s one admission a Toyota executive once made to a Chevrolet executive that pretty much sums things up. He said, “We may build a product that people want to buy, but you build a product that people want to love.”

Every car company needs a people of various types. They need “car guys”, who are interested in cars. They need “money people,” who know how much it’ll cost to build something, they need someone to help balance the two. One can’t dominate over the other.

What’s amazing is that in 1976 no one sitting in one of those OPEC inspired gas lines could have predicted that in 40 years there would be so much product on the market there wouldn’t be a place to store it and that prices would have just collapsed 50% to 1965 prices adjusted for inflation. Today we have 4-cylinder cars that could run rings around any V-8 model of 1976 and V-8 models that can out perform the hottest cars of the Muscle Car era, but GM lost its way and now has barely 18% of the market. I know on some cosmic plane the employees and owners of the independents of the 50’s, Nash, Hudson, Packard, Kaiser are looking around at each other, nodding and smiling.

I have to chime in here, with respect to GM. Man, did I ever dodge some bullets in the past, due to luck/circumstance/some small knowledge.

The first time was when I looked at a Vega in late 1972. My GTX just wasn’t winter friendly. I passed on this car because:
1. The salesman, despite being the uncle of a friend of mine, was a class “A” jerk. (The term I wanted to use is unprintable).
2. After he tried to get me to buy the car BEFORE test driving it, I discovered that the roofline on the hatchback was too low for me.
I bought a 1973 Plymouth Duster, for about $120 or so more.

The second time I dodged a bullet was when it was time to replace my aging/rusting 1977 Malibu Classic w/350/350. Gas was going up, and I wanted better mileage. I looked at a 1981 Oldsmobile Omega. Two things turned me off:
1. Torque steer (I’m going from memory here).
2. The class “A” salesman, who tried to con me. (Why do they keep trying to do that?)

I then looked at a Malibu, but my Malibu wasn’t worth much in trade, so I kept it for another six years, then bought a 1987 Cutlass Supreme, w/305/200R4 which I drove for 19 years.

It is the Cutlass that I wonder about. It was discontinued the after following year. My understanding was that the Cutlass was the then number two selling vehicle. Craig stated in one of his replies that the car was replaced with the W-body FWD. When I never understood was, why discontinue a car that is selling like hotcakes? The time to discontinue a car is when nobody wants it.

A former frenemy of mine bought a 1988 Bonneville, which is similar to the Cutlass Supreme FWD replacement. The repair cost differential was telling.

My impression was always that GM thought that it could dictate to the market what its customers would drive, rather than selling them what they wanted. GM dug their own grave, with that kind of hubris.

Toyota was actually remarkably resistant to FWD, in part because of the tooling costs and in part out of concern for customer resistance. The Corolla and Corona didn’t begin the switch to FWD until 1983, and the changeover wasn’t complete until 1987.

The Camry was a slightly different story because the first FWD (V10) Camry/Vista was an all-new model on an all-new platform. (There had been a RWD car carrying the Camry name — the Celica Camry — but that was a JDM-only version of the Carina sedan with a Supra grille.) Although the Camry effectively succeeded the Corona in their U.S. lineup, it was NOT a renamed Corona — the Corona line continued separately in Japan through the year 2000.

Toyota’s big cars (the X-platform Mark II/Cressida/Chaser/Cresta and the Crown) never switched to FWD.

Belated congratulations Craig, what a great article. I am curious about your statement concerning the Buick turbo V6: “hings like the genesis of the turbo Buick V6 originating from a Boy Scout project is testament to this.”
Could you please go into more detail. As a former Buick GN owner I find this very interesting.
Thank You

When we compare a Chevy Citation’s interior and that of a Malibu, Both cars were cheap and the Vega was a disaster. The poor quality of the GM product was “institutional”, not linked to an only family cars. For all these reasons, I don’t think that the X-cars initiated the tragic GM’s fate. On other hand, the TASC program, which eventually led to X-cars, had to be an early global platform for GM and it would have been a success if the initial concept had been respected but, since the inception, the project met many resistances of divisions’ managers which won more bonuses if theirs cars were equipped with their divisions’ components or not. Consequently, they were reluctant to develop a new engine family or to use the Opel’s expertise. In a scarce foresight, Bill Mitchell had launched a similar project nicknamed VOH (Vauxhall- Opel-Holden) which was dropped for the same reasons (https://www.shannons.com.au/club/news/retroautos-march-gms-secret-1963-plan-to-interchange-vauxhall-opel-and-holdenmo/). Furthermore, initially, the program planned to use the aborted Ed Cole’s rotary engines, the rotary program costed a lot of money and, according to me, delayed the TASC, started in late 60! This money would have enabled to design these new engine family (1300 cc-1800 cc) or/and improve the final result. Finally, they have used an old four inline engine, too big and not quite international. The x-cars would have been a catalyst to change the corporate if all divisions (US or european) had participated to this collective effort.

Craig this is a fascinating article. Being an Aussie I have no experience of the X cars, but they certainly looked good to me.
I’m confused about the lack of engineering and development everyone talks about. If the X body was sold as a Chevrolet, Pontiac, Oldsmobile and a Buick, doesn’t it follow that there were 4 entire design, engineering and manufacturing departments available? How is it possible that the car came out half-baked?
Was it a Central Engineering project like Vega? Did Chevy have to do it all? Was there no collaboration?
Shouldn’t the result have been 4 times better than what a standalone brand could produce?